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The Luna AIM portfolio delivered a return of 16.3%* during the fourth quarter which was ahead the FTSE AIM All Share TR index of 7.8%*. 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 31/12/2023) the Luna AIM Portfolio has outperformed, returning 6.8%* compared with the FTSE AIM All Share TR of -9.7%*.

During the quarter the portfolio performed strongly as sentiment recovered in equity markets and due to mergers and acquisitions (M&A) activity. Mars Inc has agreed to acquire chocolatier Hotel Chocolat for £534 million. The offer represented a substantial 170% premium over Hotel Chocolat’s closing price the day prior to the bid being announced.

Other AIM companies held bounced strongly from depressed levels; Mortgage Advice Bureau was up 56%**, Strix up 43%** and Next 15 Group was 31%** higher.

On the negative side Frontier Development was the weakest position for the second consecutive quarter and was down 41%**, the company lowered FY24 revenue guidance to £80-95m (from approx £108m). This was due to sales of the new Warhammer game being lower than expected. The news triggered Chair David Wilton to step down, who was replaced by NED Ilse Howling.

In summary, it was a much better quarter for AIM companies with the majority of share prices rallying coupled with Hotel Chcolat being taken over at a huge premium. This reflects the cheap valuations on offer in the AIM market currently. 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 potentially 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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