The Downing AIM ISA combines ISA tax benefits with full IHT relief after two years by investing in a concentrated portfolio of at least 20 AIM-quoted companies that carry on an IHT-qualifying trade.
Your capital is at risk and you may not get back the full amount you invested. Investments are long term and high risk. Tax reliefs are subject to change and depend on personal circumstances. Please find further details of the risks here.
What do I need to know before investing?
Where is my money invested?
We invest in the shares of at least 20 companies listed on the Alternative Investment Market (AIM) that we believe qualify under business relief (BR) legislation. We focus on AIM-listed companies that have a market capitalisation below £150 million, otherwise known as ‘micro-cap’ companies.
The key criteria we use to identify the right companies to invest in are:
- The quality of the management team.
- The business’s ability to maintain an advantage over its competitors.
- The company’s valuation in comparison to similar companies.
- The growth potential of the company and its sector.
- The profitability of the company and its cash flow yield.
Our approach is to take strategic, long term investment positions (holdings of 5% and higher) in companies that have passed our rigorous due diligence process.
Market inefficiencies in the micro-cap sector such as lack of analysts coverage, low volumes and prices that aren’t transparent, can provide opportunities for investors.
We sell investments that we think are no longer beneficial to your portfolio or to make way for new opportunities. To maintain IHT relief, existing investments are sold only if there are suitable alternative investment opportunities.
What are the risks?
Investments in estate planning services are not suitable for everyone, so we recommend seeking financial advice before investing. As with all investments, there are risks you should be aware of before you invest.
- The value of your DISA portfolio can go down as well as up so your capital is at risk.
- IHT tax reliefs are not guaranteed, subject to change and only apply if you hold your shares for a minimum of two years and at death.
- IHT qualifying companies may lose their status if IHT rules change, which means IHT relief may no longer apply to the money you have invested in that company.
- The past performance of DISA is not a reliable indicator of future results.
- Investing in smaller companies generally carries higher risk because their shares are less liquid and harder to sell than those in blue chip companies on a main stock exchange.
- There is no guarantee that the Downside Protection Cover will continue after two years and if the conditions are not met in full then the cover will not pay out.
- The Life Cover policy is subject to conditions. If the conditions are not met in full then the policy will not pay out. Please ensure that you read the terms & conditions.
Please note this is only a brief overview of the risks involved with investing in DISA. Please read full details of all the risks here before investing.
How is my investment protected?
- Downside Protection Cover: Included as standard and if you're less than 90 years old, this policy is designed to reduce the impact of any loss during a minimum of the first two years before your investment qualifies for IHT relief. It covers a loss in the value of up to 20% of your initial net investment - with no medical questionnaires or exclusions for pre-existing conditions and at no extra cost. The policy is renewable (by the insurer) each year although we can't guarantee it will remain in place after the first two years.
The maximum benefit is £100,000 per investor (equivalent to an approximate investment of £500,000).
- Life Cover: This is optional for an additional fee and is available to investors under the age of 85 at the date shares are acquired. It covers 40% of your original gross investment upon death in the first two years. After then, you will benefit from Downside Protection Cover, although this cannot be guaranteed. Please note, the Life Cover policy is subject to conditions and if they are not met the policy will not pay out.
The maximum benefit is £100,000 per investor (equivalent to an approximate investment of £250,000).
What are the charges?
Initial charge - special offer 0% until 31 May 2020 Annual charge via adviser 2% plus VAT p.a. of the value of each portfolio (payable quarterly in advance) Initial charge execution-only basis 4% (2% of which will usually be paid to your intermediary unless otherwise indicated on your application form) Annual charge execution-only basis 2.5% plus VAT p.a. (0.5% of which will usually be paid to your intermediary for four years) Probate valuations for up to six listed securities £250 plus VAT Probate valuations for seven or more listed securities £200 plus VAT and £10 plus VAT per security held Life Cover 2.25% p.a.* for the first two years (optional)
*Calculated on the original gross investment and allocated annually in advance.
We do not charge any administrative, service, exit or performance related fees. We do not charge any dealing fees, however third party transaction fees will apply.
Who's the team behind DISA?
DISA is managed by our experienced Public Equity team, which is headed up by Judith MacKenzie, an award-winning* fund manager.
Downing Public Equity was founded in 2011 and has grown to manage £184 million of which £66.6 million are BR IHT funds (as at 30 September 2019).
Our investment committee draws on a significant number of years investment experience to provide oversight on new investments and portfolio management.
*Named Small Cap Fund Manager of the Year, Small Cap Awards 2013 and 2015, for the Downing UK Micro-Cap Growth Fund.
What happens once I've invested?
Once you've applied to join the Downing AIM ISA we'll send you a letter confirming that we've received your application.
If you have selected Life Cover we will send you an insurance certificate.
After your funds have been invested, you'll receive quarterly valuation statements and half-yearly reports that contain details of all the investments in your portfolio and commentary on how your investments are doing.
You can request to access your money at any time. We target to return requested funds within 30 days. Note, this is subject to our discretion, liquidity and 10 business days' notice. And not to worry, we won't charge or impose a penalty if you choose to take some or all of your money out of the service. Note, withdrawals will not benefit from IHT relief.