The Downing AIM ISA Estate Planning Service provides full IHT relief after two years by investing in a diversified target portfolio of 25-40 companies that are listed on AIM and carry out a business relief 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 25-40 companies that are listed on AIM and we believe qualify under business relief (BR) legislation. We focus on AIM-listed companies that have a market capitalisation below £500 million, otherwise known as ‘smaller 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 in companies that have passed our rigorous due diligence process.
Market inefficiencies in the smaller companies sector such as lack of analysts coverage, low volumes and prices that aren’t transparent, can provide opportunities for investors.
The businesses in the portfolio have been heavily researched ‘in-house’ with the aim of making sure they are in a good place to deliver returns for investors. As well as using their own expertise, Downing Fund Managers enlist Downing LLP’s wider investment team and its 30-plus years’ experience of investing in small companies to really get to know the portfolio companies and take a pro-active role in helping them thrive.
We consider environmental social and governance (ESG) factors during each stage of our investment process from initial selection and evaluation through to active ownership of the companies in DAISA. We are a signatory to the Principles of Responsible investment and to the UK Investing in Women Code and we are committed to finding more ways to support responsible investment initiatives.
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 DAISA portfolio can go up and down 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 DAISA 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 and conditions.
- We aim to invest your money in between 25 and 40 companies, which may vary by sector and value. The relative concentration in your portfolio can create more risk compared to investing in a wider portfolio of companies.
- The shares of AIM companies may be illiquid and tend to be harder to sell than those of large companies. This means that if you want to make a withdrawal or transfer funds from your portfolio, you may not be able to sell the shares immediately and you may have to accept a price that is less than the real value of the companies.
- There could be a delay in returning cash in the event of significant demand for withdrawals or distributions. Investors may, therefore, not receive cash for a period of 12 months or more.
- The ESG strategy may result in companies and sectors that may underperform against the market or other services that consider ESG factors in their investment decisions. Also, investments selected may not have positive ESG characteristics or practices at the time of investment or later.
Please note this is only a brief overview of the risks involved with investing in DAISA. Please read full details of all the risks in the Brochure and Terms & Conditions, 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 across all Downing products).
- 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 across all Downing products).
What are the charges?
As with any investment product, there are costs involved in researching businesses, making investments, monitoring performance, and providing you with customer service. Below is a summary of the charges designed to cover these costs for investors who invest via a financial adviser.
Further details on charges and fees are set out in the terms & conditions, which also includes information on additional charges where an investor has come in directly or where commission is payable on an investment (e.g. by those investing on an ‘execution-only’ basis).
Charges for managing your investment:
Annual management charge 1.5% plus VAT Based on the value of your portfolio Bargain fee £35 plus VAT Per transaction
Who's the team behind DAISA?
Investments in the Downing AIM ISA Estate Planning Service are made on your behalf by Downing Fund Managers, formerly Downing Public Equity - founded in 2010 and now managing over £402 million of assets, of which £99 million are BR IHT funds (as at 31 August 2021).
Downing Fund Managers also enlist the services of independent adviser, Donald Robertson. As the former co-founder of SVM Asset Management, Donald has over 20 years’ small company quoted investment experience.
Our investment committee draws on a significant number of years investment experience to provide oversight on new investments and portfolio management.
What happens once I've invested?
Once you’ve applied to invest in DAISA we’ll send you an acknowledgment (within two business days) that your application has been accepted.
If you have selected Life Cover we will send you an insurance certificate.
After your funds have been invested, you’ll receive quarterly valuations and updates on the performance of your investment. You’ll also receive annual fees and costs statements.
It’s our goal to have all your money invested within eight weeks of receiving a fully completed application form and cleared funds. We can’t, however, guarantee this and it may take a little longer (e.g. up to three months) to get you fully invested.
You can request to access your money at any time. We target to return requested funds within 30 days. We’ll do our best to get the funds to you within 15 business days after the date of your request. Note, this is subject to our discretion and liquidity. 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.