Oakglen Wealth, the independently owned wealth manager with offices in Jersey and London, has partnered with Toscafund Asset Management LLP, a specialist investment manager with approximately $2.5bn of assets under management, to launch an inheritance tax solution providing an Alternative Investment Market (AIM) portfolio service.
The partnership will allow Oakglen to invest into qualifying smaller companies listed on the AIM market on each of their client’s behalf, following a model portfolio designed by Toscafund.
The diversified model portfolio of around 30 stocks has been constructed by Toscafund portfolio manager Matt Siebert and seeks to take advantage of the two-year Business Relief holding period. It targets smaller companies with an average market capitalisation of c£250m, compared to peers’ £400-700m, and spans 14 broad sectors, with no single sector exceeding 20%.
While UK-centric, the model portfolio maintains a global footprint with 30% of revenue derived from Europe and the US, offering investors exposure to international markets alongside domestic opportunities. Management and founders of portfolio companies own an average 15% of their businesses.
A similar selection process has been previously applied to the Tosca Micro-Cap UCITS fund. That has outperformed the AIM All-Share Index with an annualised alpha of 2.2% since inception to 31 December 2023 (based on the GBP institutional share class). The Oakglen AIM IHT solution, in partnership with Toscafund, is designed to offer attractive valuation metrics, reflecting strong top line growth, healthy margins and cashflow with only modest leverage.
Dominic Tayler, managing director – UK, said: "The partnership between Oakglen Wealth and Toscafund represents a significant milestone in our commitment to providing tailored wealth management solutions to our clients. The Small-Cap sector is under-researched and therefore often overlooked, despite these companies having a high potential for fast growth and M&A. This creates an excellent opportunity for those able to exploit this inefficiency and with Toscafund’s proven track record in the Small and Mid-Cap space we’re thrilled to be able to offer this AIM portfolio IHT solution to our clients."
Matt Siebert, portfolio manager, Toscafund Asset Management, said: "For the past three years, the UK SMID-Cap market has materially underperformed global peers due to factors such as falling liquidity, lower equity market exposures and increasing interest rates. However, recent developments suggest there are potential improvements. AIM is expected to catch up, helped by the potential introduction of a British ISA and the Mansion House Protocol focusing on pension fund allocations. Additionally, the rate cycle is projected to turn, potentially reducing financing costs. Valuations are currently at multi-year lows, attracting investment, and M&A activity continues to be strong. The IHT solution is strategically positioned to capitalise on these evolving market dynamics, and we aim to outperform the AIM All-Share Index by 5% over the cycle."
