Monday 20 June 2016 1:46 pm

Maturity of Aim questioned as it celebrates its 21st birthday

The London Stock Exchange’s alternative investment market (Aim) has turned 21. But, in a happy birthday message, Hargreaves Lansdown has questioned its maturity.

Senior analyst Laith Khalaf highlighted in a note this morning how the FTSE Aim Index has fallen by 30 per cent since its launch.

Read more: Here's why you should invest on AIM

“While Aim has been home to many individual success stories, the market as a whole has been a graveyard of failed ambition,” he said.

“The performance of Aim compares poorly with indices from the main market over the same time period. The conclusion is Aim is not a market for investors to buy en masse in the same way they may do with the FTSE 100 through a tracker fund. Instead they need to approach it with a fine tooth comb to make sure they are picking out the winners and avoiding the deadwood, or alternatively buy a fund where a fund manager does this on their behalf.”

But Khalaf also highlighted three big Aim success stories: Asos, which is currently the biggest stock on the market after launching in 2001; Domino’s Pizza, which launched in Aim in 1999 and is now on the FTSE 250; and Majestic Wine, which launched on Aim in 1997.

Read more: London Stock Exchange-Deutsche Boerse merger could lead to 1,250 job losses

Hargreaves Lansdown sent this table out in a note this morning: 

  Price return (22/01/1996 – 15/06/2016) Total return, dividends re-invested (09/05/1997 – 15/06/2016)
FTSE Aim -30% -22%
FTSE 100 59% 143%
FTSE 250 300% 511%
FTSE Small Cap 124% 220%

London Stock Exchange chief executive Xavier Rolet paid tribute to Aim today, pointing out that it was predicted to fail at launch.

Writing in The Times, he said: “Given that no other country had managed to establish such a market, despite several attempts, initial fears were understandable. Would it attract quality, mature companies and raise significant capital? Would it garner investor and company confidence? Would it represent a diverse range of corporate sectors and offer positive aftermarket performance? The answer is yes.

“As Aim celebrates its 21st birthday, it has grown into the most successful growth market in the world. Valued at £75bn, it has supported more than 3,650 companies from 90 countries and across 40 sectors, raising nearly £100bn for these companies to invest and grow.”

Read more: Tech entrepreneurs aim higher than alternative investment market

Aim in numbers

Hargreaves Lansdown also pulled out the following figures:

The FTSE Aim index was launched in January 1996 and the market was opened on 19 June 1995

At launch, Aim had 10 companies listed worth £82m

Today, there are 1,016 companies worth a total £75bn

The market was bigger in 2007 when it had 1,694 companies worth £98bn

Over its 21 years, 3,673 companies have been admitted to the market, raising £97bn.