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During the quarter the standout positive
performer was Johnson Service Group

The Luna AIM portfolio delivered a return of -8.1%* during the third quarter which was behind the FTSE AIM All Share TR index of -3.2%*. We are conscious that this is a very short-term time period and when taking a longer-term perspective from launch (01/06/2020 to 30/09/2023) the Luna AIM Portfolio has outperformed, returning -6.6%* compared with the FTSE AIM All Share TR of -13.5%*.

During the quarter the standout positive performer was Johnson Service Group, which surged 31%**. The firm posted an impressive recovery in revenue for the six months to June and announced a new share buyback programme. In addition, the company lifted its outlook for the full year for the second time thanks to steady trading and before the inclusion of its latest acquisition.

On the negative side Frontier Development was down 63%**, the company announced disappointing results. In September they announced a year-on-year decline in revenue of 8.3% and wider than expected operating losses due to noncash impairment charges and accelerated amortisation of underperforming titles.

Another name that disappointed was Strix, down 49%**, after it reported a large fall in first-half earnings and cut its dividend as a recent acquisition pushed its debt ratios higher. Revenue of £65.2 million was up 28.6% year on year, helped by the £38 million purchase of instant-boiling and sparkling-water taps manufacturer Billi in October 2022 offsetting a reduction in organic sales, particularly in kettle controls. Profit after tax declined 51% to £5.7 million in the six months ended 30 June 2023, mainly attributable to interest and finance fee costs due to an increase in the net debt to fund the Billi acquisition amid the higher interest rates environment.

In summary, it was a tough quarter for AIM companies with the majority of share prices falling in value. 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


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