A new moneyspinner on the block

Just a year into its life, the Alternative Investment Market is proving its value.

On 19 June last year, a new stock market was launched with all the sceptical acclaim of a new British car. Yet 12 months on, the Alternative Investment Market (AIM) is alive and well and seemingly growing by the month.

Although there is still a long way to go before it even reaches adolescence, the toddler has already proved its worth and silenced many of its critics.

There is only one clear initial reason why we need stock markets: they raise money for industry, and that means more investment, more jobs and more economic growth. But why on earth would we need another stock exchange? Surely there are enough red braces in the world without creating the excuse to encourage more?

The main London Stock Exchange is very effective for larger and international corporations, and in fact trades more international shares than any other market in the world, but it is definitely not geared up to handle the tiddlers.

AIM was established with the key intention of making stock market flotations simpler, more understandable, more accessible and hopefully less expensive.

With this in mind, everything from the flotation procedures to the brochures were designed to see how best they could be made more user-friendly to those not normally involved in such transactions. This included not just the companies and their directors, but also the investors, who are normally the last people to be considered.

Instead of the flotation process being centred on the Stock Exchange in London, the responsibility was devolved to broaden the process through new animals known as Nominated Advisers. These advisers had to have a respectable track record but did not need to have the size or costs of the London merchant banks.

There are 167 companies now on AIM, with a current value of approximately pounds 3.45bn. A total of more than pounds 340m of new capital has been raised and this is increasing steadily. This is more than anticipated, and certainly a surprise to those who were expecting or even encouraging infanticide earlier in the 12 months.

Perhaps the most encouraging element is the amount and value of trading that is going on. Far from being occasional, the volume has been quite brisk and been probably ahead of those smaller companies on the main market. It had been thought that just biotech and property companies would be the chief beneficiaries. This has not been the case to date. So far it has spread from printing companies to pawnshops and brewers to broadcasters.

But what about us as investors, should we dive in enthusiastically? Some of the shares listed on AIM have performed spectacularly, including Africa Gold, Celtic FC, DBS Management, Dawson Holdings, Old English Pub Group, Pet City, and Surrey Free Inns. But the answer is a clear no. By all means invest, but cover your targets carefully first.

AIM is a fascinating market, but you should only invest if you are willing to accept a higher level of risk. That risk can earn you a greater return, but also a greater chance of loss. Caveat emptor is the Latin tag which should direct us to be wary, but having weighed up the risks invest carefully.

The good thing about many AIM companies is that they are localised, and thus we as investors can bring our own knowledge and skills to bear to our own advantage. If in doubt, you could consider a pooled investment in AIM, like Singer & Friedlander's AIM Investment Trust.

AIM has had a remarkable first year, and no doubt it will have to suffer the pains of adolescence in the future. To date it has been a great success, and has all the chances of continuing to do so - and let's hope the Toddler doesn't throw a tantrum. Happy birthday.

The writer is business planning director of Barclays Stockbrokers Ltd.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Lois Pryce... Life Without a Postcode. Lois lives on a boat with her husband.. Registering to vote in the election has prooved to be very difficult without a fixed residential post code. (David Sandison)
newsHow living on a houseboat meant I didn't officially 'exist'
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Steven Fletcher scores the second goal for Scotland
cricketBut they have to bounce back to beat Gibraltar in Euro 2016 qualifier
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Retirement Coordinator - Financial Services

    Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

    Recruitment Genius: Annuities / Pensions Administrator

    Negotiable: Recruitment Genius: You will be the first point of contact for all...

    Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

    £18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

    Ashdown Group: Learning and Development Programme Manager

    £35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

    Day In a Page

    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat
    Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

    Saudi airstrikes are fuelling the Gulf's fire

    Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
    Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

    The only direction Zayn could go

    We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
    Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

    Spells like teen spirit

    A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
    Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

    If fashion is a cycle, this young man knows just how to ride it

    British designer Jonathan Anderson is putting his stamp on venerable house Loewe
    Number plates scheme could provide a licence to offend in the land of the free

    Licence to offend in the land of the free

    Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
    From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

    From farm to fork in Cornwall

    One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
    Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

    Robert Parker interview

    The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
    Don't believe the stereotype - or should you?

    Don't believe the stereotype - or should you?

    We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
    How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

    How to make your own Easter egg

    Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
    Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

    Bill Granger's twist on Easter Sunday lunch

    Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
    Joe Marler: 'It's the way I think the game should be played'

    Joe Marler: 'It's the way I think the game should be played'

    The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
    Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

    Cricket World Cup 2015

    Has the success of the tournament spelt the end for Test matches?
    The Last Word: Justin Gatlin knows the price of everything, the value of nothing

    Michael Calvin's Last Word

    Justin Gatlin knows the price of everything, the value of nothing