The Luna AIM portfolio delivered a return of -7.7%* during the second quarter which was behind the FTSE AIM All Share TR index of -2.7%*. We are aware that one quarter is a very short time period and when taking a longer-term perspective from launch (01/06/2020 to 30/09/2024) the Luna AIM Portfolio has outperformed, returning 8.9%* compared with the FTSE AIM All Share TR of -10.1%*.
The best performing AIM holding was Gamma Communications, provider of Unified Communications as a Service (UCaaS), which closed up 18% during the quarter. In its September 2024 half-year report, Gamma Communications reported that revenue and gross profit were impacted by negative foreign exchange movements. However, excluding the impact of foreign exchange, revenue was flat, and gross profit growth was 7%. Gamma Communications reported a number of contract wins, including: SD-WAN, LAN, WiFi, and security infrastructure for Morrisons Supermarkets, Morrisons Local, and McColl’s newsagents. Finally, they also announced sales to JD Sports Fashion in the US.
On the negative side, Next 15 Group, who combine Insight, Engagement, Delivery and Transformation services to help businesses grow faster, saw their share price drop 41%. They issued a profit warning on September 6, 2024, after its largest customer cancelled its contract with its Mach49 accelerator platform. Next 15 had expected to earn £80 million from the contract in 2026. They also reported lower marketing spending from tech firms and reduced revenues from public sector clients.
In summary, it was a weaker quarter for the Luna AIM portfolio relative to the AIM All Share. 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
This publication provides general information only and does not address individual needs. Articles are not advice and should not be fully relied upon. While efforts are made to ensure accuracy, information may become outdated. Seek professional advice before acting. We are not responsible for any resulting loss. Tax laws, rates, and reliefs may change, and their impact depends on individual circumstances. Investments can fluctuate, and past performance is not a reliable indicator of future results.
Luna Investment Management Limited (FRN: 923454) is an appointed representative of Thornbridge Investment Management LLP (FRN: 713859) which is authorised and regulated by the Financial Conduct Authority. Luna Investment Management is registered in England. No 12280396