The novelty of holding AIM shares in individual saving accounts (ISAs) appears to have worn off.
It has now been two years since all AIM stocks became eligible for inclusion in ISAs, but, putting them into the tax-efficient wrapper is now less popular.
According to data, 20% of ISA account holders have bought AIM stocks in the last year, compared to 30% in its introductory year.
Helal Miah, investment research analyst at The Share Centre, says the 10% decrease is not surprising due to “high investor appetite and excitement” when the new initiative was launched in 2013.
The most popular sectors include mining, oil and gas, which given the drop in commodity prices – metals, oil and gas – and that points to the reason for the decline, according to Miah.
“Companies listed on the AIM market tend to be geared towards the oil and gas and commodities sectors due to their higher risk. Investors will know that such industries have suffered significantly over the last year, which may also explain the decrease in investment” Miah said.
In the last year, commodity prices have collapsed, particularly the oil price which has more than halved. Brent crude has dropped from US$101.56 a year ago to just US$49.
Miners have fared little better, with copper falling to US$232 from US$313 while gold has dropped to US$1,120 from US$1,298.
Still, Miah sees upside in AIM shares.
“Although investments have marginally decreased, AIM shares often offer investors strong growth potential and the change in regulations has demonstrated that there is consumer interest in the smaller market cap companies” he said.
His three preferred AIM stocks are OPG (LON:OPG), Stadium (LON:SDM) and Finsbury Food Group (LON:FIF).