The Luna AIM portfolio delivered a return of -10.5%* during the third quarter which was slightly behind the FTSE AIM All Share TR index of -7.7%*.

We are conscious that this is a very short-term time period and when taking a slightly longer-term perspective from launch (01/06/2020 to 30/09/2022) the Luna AIM Portfolio has outperformed, returning -1.5%* compared with the FTSE AIM All Share TR of -5.7%*.

During the quarter the standout positive performer was GB Group, which surged 53%** after US private equity firm GTCR confirmed it was considering a cash offer for the identity verification specialist. It should be noted that early in the fourth quarter the bid was rescinded, and the share price has moved lower. However, this bid approach highlights that it is a high quality business trading at depressed levels. It is again interesting that this is from an American private equity firm that is taking advantage of the stronger exchange rate to buy the business at an even more attractive price, in dollar terms.

On the negative side Hotel Chocolat shares were 58%** lower. This follows issues with its expansion in the US which has wiped out profits for the current financial year and will create a drag in future years too. The business remains well capitalised with cash in hand of £17m and £50m of available undrawn headroom in the group’s working capital rolling cash facility. The company has also confirmed that inventory production for 2023 is well advanced.

In summary, it was a tough absolute and relative quarter for the AIM portfolio with the market backdrop providing difficult conditions for investors. Please remember that the AIM portfolio has been created to invest in companies that qualify for Business Property Relief (BPR) and in doing so are therefore outside of the estate for Inheritance Tax Purposes (IHT)***.  Whilst delivering long term performance is obviously welcome, we are looking to mitigate share price weakness that would negate the reason for investing in AIM (saving 40% IHT).

* Source: MorningStar Direct

** Source: Alpha Terminal

*** based on current tax legislation and holding the assets for a minimum qualification period

The content in this publication is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results.