Over the first year, the Luna AIM portfolio has returned a staggering 47.4% and outperformed the FTSE AIM All Share index return of 44.6%. Whilst we are delighted to deliver such strong performance in the AIM portfolio’s first year we must more importantly remember that those investing on the first day of launch are now halfway through the two year investment time period for these assets to be outside the estate.
So why has performance been so strong?
As you can see from the AIM index market performance – this time last year companies were in hindsight very cheap. This was a function of the UK and other global nations being in lockdown and pushing the global economy into recession. Fast forward a year, we have a number of successful vaccines, which in the UK has been administered to the high priority groups and as a consequence, the economy is gradually reopening.
But that only tells half the story – the companies we have selected in the AIM portfolio have also been net beneficiaries from the Covid environment. During the year some of the big winners have been;
We are not static in our investment approach at Luna, and we have sold two of the above companies and reinvested in companies that can benefit as the economy reopens.
A recent change has been to reinvest in Young & Co Brewery. We have done this to benefit from the economy reopening from restrictions and believe public houses will be a key beneficiary.
We continue to scour the AIM market for companies that both qualify for business property relief and we adjudge to be good quality as well. We deem quality as companies that; have good management, they are in growth mode, have high margins and a strong balance sheet.
Valuation is also a key consideration, and we look to take advantage of cheaper valuations to provide an element of downside protection. We believe this remains a very sensible approach when investing in some of the highest risk companies in the UK market.
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