David Prosser: Companies on the under-the-radar Aim provide lesser-spotted value as the whole index performs

Small Talk

Has the Alternative Investment Market finally turned the corner? After several years in which it has been unable to match the returns generated by main market equities, Aim is on target to top the rankings this year.

As of yesterday, Aim was up more than 16 per cent over 2013, well ahead of the single digit returns recorded by indices such as the FTSE 100 and the FTSE All-Share. The largest companies on Aim, moreover, have risen by more than 30 per cent this year.

That outperformance, which has really picked up during the second half of the year, will delight investors frustrated at Aim's previous inability to keep up the recovery seen elsewhere in UK equities. Last year, for example, smaller companies on the main market returned 24 per cent to Aim's 2 per cent.

It isn't just performance that is improving on Aim – so too is the health of the market itself. After a period of more than five years in which companies have departed Aim at a far swifter pace than new joiners have arrived, this trend has reversed. With around 1,100 companies today, Aim is unlikely any time soon to return to the heady days of 2007, when its constituents numbered 1,695, but the market is growing.

Nor does the accusation often levelled at Aim that its less rigid regulatory requirements represent a haven for the dodgy and the dubious any longer hold much water. In recent times, the 160 companies that have transferred from the junior market to the Official List have found it straightforward to comply with the more exacting rules on the main market.

No doubt there will be setbacks in the years ahead – the system of nominated advisers remains problematic – but governance standards have undoubtedly improved. The 80 biggest Aim stocks each have a market capitalisation of more than £250m. These smaller companies are not so small, and are mostly run accordingly.

However, the best thing about Aim for ordinary investors is that it remains below the radar for the vast majority of investment institutions. This means it is still possible for amateurs to spot bargain stocks that the professional investors have overlooked.

It helps that the Government has suddenly rediscovered Aim. After years of wondering how to help small companies access finance, ministers remembered that an equity market already exists to help small and medium-sized enterprises do that.

In the summer, it made Aim stocks permissible holdings for individual savings accounts (ISAs). And from next April, there will no longer be any need to pay Stamp Duty on purchases of Aim shares.

These tax breaks have captured the imagination of retail investors. Stockbrokers report that as many as a third of transactions are now for Aim stocks.

Many of these smaller companies consistently deliver on the global stage, but have only just begun to get the recognition they deserve.

Online threat to independent retailers

Good news and bad from the Office of National Statistics (ONS) for independent high street stores.

Their sales were up 4.5 per cent, year-on-year, in November, the ONS said yesterday, compared with only 2.9 per cent growth in larger stores. Less happily, online sales continue to race ahead at a far quicker pace.

Last week's Small Talk focused on the difficulties that small, independent retailers are facing – the challenge comes not so much from their larger rivals, though this remains an issue, but from ecommerce.

Yesterday's figures underline the scale of the problem – the proportion of all retail sales (excluding fuel) made online rose 1.4 percentage points to 11.9 per cent in November, more than ever before.

The conclusion can only be that smaller retailers which do not find a way to grab their share of the ecommerce market are going to struggle to survive.

Executives invest in peer-to-peer leading

The path from business leader to trusted adviser is a well-worn one, with C-suite executives often going on to serve as non-executives at developing businesses in retirement.

However, a new report claims the growth of peer-to-peer lending is encouraging business leaders to get involved with small businesses in a different way – and not necessarily only once they retire.

More than half the high-net-worth business leaders questioned in a survey by FundingKnight, which enables individuals to lend online to small businesses, said they had already tried peer-to-peer lending, or would be prepared to do so.

Graeme Marshall, the chief executive of FundingKnight, said the findings represented the desire of many senior business leaders to give something back to the community, as well as their openness to innovation.

"Peer-to-business lending is tapping into a mood in the UK to do business differently," Mr Marshall said. "Experienced businesspeople are taking their skills and leveraging them to make wise investment decisions that are helping drive the success of other small and medium-sized enterprises."

Small business person of the week

Tom Latchford; Chief executive, Raising IT

"My last job was working for a charity in the disability sector – we were running it in a really old-school way and then Facebook and Twitter came along and the potential for charities just really blew me away. Then I spent some time in the US working on Barack Obama's first Presidential campaign, which really did amazing things with social media.

"We set up Raising IT just over four years ago – to create a simple, easy-to-use platform that would offer charities everything they need to exploit digital opportunities in a single place at an affordable price. It has taken us some time to realise that vision, but we've really begun to scale up over the past 12 months and we've acquired some really big clients – the RSPCA and Mencap, for example.

"We offer services in five key areas: content management, fundraising solutions, ecommerce products, a community system that includes social media and a campaigns offer. The idea is to be able to help charities with everything they might possibly do online.

"The costs have to be affordable, so we charge a £10,000 set-up fee and then an ongoing licence fee, but importantly we don't take any commission.

"We're beginning to see the benefits of economies of scale: in time, we can be the global de facto solution for charities."

Start your day with The Independent, sign up for daily news emails
Voices
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm today
News
people
Arts and Entertainment
Bianca Miller and Katie Bulmer-Cooke are scrutinised by Lord Sugar's aide Nick Hewer on The Apprentice final
tvBut Bianca Miller has taken on board his comments over pricing
Life and Style
Approaching sale shopping in a smart way means that you’ll get the most out of your money
life + styleSales shopping tips and tricks from the experts
PROMOTED VIDEO
News
Elton John and David Furnish exchange marriage vows
peopleSinger posts pictures of nuptials throughout the day
News
in picturesWounded and mangy husky puppy rescued from dump
Sport
David Silva, Andy Carroll, Arsene Wenger and Radamel Falcao
football
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

SThree: Graduate Recruitment Consultant

£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K - £45K: SThree: SThree Group have been we...

Day In a Page

Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'