Trustnet Magazine Issue 37 February 2018 | Page 8

For promotional purposes
/ JANUS HENDERSON /
T
HERE ARE ALWAYS
MONEY-MAKING
INVESTMENT
OPPORTUNITIES
waiting out in the
market and it is only lack of
imagination and idleness that stop
us professional investment
managers from taking them. This is
a fact I have needed to remind
myself about in recent months. The
UK can appear depressing with the
Brexit debate ratcheting up to the
point of angry disagreement in
which everyone will be a loser and
where real wages are falling. The
large consumer stocks, property
companies and utilities are facing
strong headwinds, with a
slowdown in economic activity
predicted. There is also the
structural challenge caused by
yesterday’s strong franchises
rapidly being reduced to today’s
tired business models.
Think how Ladbrokes
dominated the betting market
only for its market share to
be eaten away by the online
platforms or the way internet
clothes retail business ASOS went
from a start-up to having a market
capitalisation nearly the same as
Marks and Spencer.
It is the rapid speed of change
that is making some AIM-listed
companies such a good hunting
ground for opportunities, despite
the economic backdrop. ASOS had
a value of a few million pounds in
2005 and it now has a market value
of £5bn (Source: Bloomberg, February
2018). It is still listed on AIM.
Many of the new, young
companies on AIM will fail but
this will primarily not be the
fault of the economy – rather
their inadequacies as a business.
In the same way the winners will
succeed because of their own
efforts and excellence of product.
It is refreshing every time to meet
and talk to a new young company
on AIM.
There will be many
disappointments, but the next
generation of dynamic UK
companies that will play their
part in driving the UK economy
forward, regardless of Brexit and
politicians, can be found on the
over one thousand companies
that are on AIM. AIM can
therefore play an important part
in a well-balanced portfolio. 
PERFORMANCE OF INDEX MAY 1997 TO MAY 2016
300%
FTSE AIM All Share -TOT Return IND (Rebased 100)
250%
200%
150%
100%
-21.6%
50%
0%
James Henderson of the Henderson Opportunities Trust says
the AIM index contains the next generation of UK companies that
could drive the economy for years to come
in the early days with absurd
valuations that proved to be
businesses of no value, followed by a
mining boom when the hype did not
match the reality, resulting in heavy
losses for investors. These two events
dragged down the AIM returns.
The returns since the 19th year
anniversary have seen substantial
growth driven by a diverse range of
stocks (see bottom chart).
Source: Datastream, as at 12 May 2016. Rebased to 100, as at 12 May 1997
PERFORMANCE OF INDEX MAY 2016 TO NOV 2017
160%
150%
FTSE AIM All Share -TOT Return IND (Rebased 100)
+44.5%
140%
130%
120%
110%
100%
90%
80%
AIM FOR
THE STARS
For a start, Brexit is unlikely to
be mentioned. The successes come
in many different areas of activity.
Tonic water producer Fevertree
and robotics company Blue Prism
were two of the stars last year, while
Scapa, an industrial tape company,
and Johnson Services, a laundry
business, have given very strong
returns recently. Success, like failure,
comes in many different areas. An
interesting characteristic of Scapa
and Johnson Group is that they
were both once quoted on the main
market. They had become problem-
riddled old companies, but the
move to AIM and new management
teams meant they rediscovered their
purpose and drive. This shows it
is not only young companies that
succeed on AIM, old companies can
reinvent themselves. It is the lighter
regulations and lower costs that
mean some companies leave the
main market to join AIM and these
can be important factors in their
recovery plans.
What, therefore, is the process for
finding a successful investment on
AIM? Given there is no blueprint
for success, there is no process for
finding a successful investment
other than doing the research. If you
stay open to new ideas and then see
a lot of companies already quoted
on AIM or coming to AIM every
so often, through elements of luck
and hard observation, the successful
investment will be found.
AIM has had a good year but this
has not always been the case: in fact
the AIM index was down from its
launch in 1997 to May 2016 (see
chart top-right).
The reasons for this were that
investors had chased fashion. There
were too many tech companies
Source: Datastream, as at 21 November 2017. Rebased to 100, as at 12 May 2016
Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved,
you may wish to consult a financial adviser. [Past performance is not a guide to future performance]. The value of an investment and the
income from it can fall as well as rise and you may not get back the amount originally invested. [Tax assumptions and reliefs depend upon
an investor’s particular circumstances and may change if those circumstances or the law change]. Nothing in this document is intended
to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of
any contract for the sale or purchase of any investment. [We may record telephone calls for our mutual protection, to improve customer
service and for regulatory record keeping purposes.]
Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which Janus Capital International Limited
(reg no. 3594615), Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531),
AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), (each incorporated and registered in
England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct
Authority to provide investment products and services.
© 2018, Janus Henderson Investors. The name Janus Henderson Investors includes HGI Group Limited, Henderson Global Investors
(Brand Management) Sarl and Janus International Holding LLC.
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