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What is the FTSE AIM market?
Have you ever heard of the FTSE AIM market? Many UK investors have, but they may not know what it actually stands for or how it works exactly.
This article explains how the FTSE AIM market works and why it’s such an important resource for investors in the UK.
Introduction to the FTSE AIM market
The FTSE (Footsie) is a stock exchange, founded in 1984. In 1992, it became officially known as The London Stock Exchange Group Plc and offers three markets: The LSE Main Market for listing larger, more established companies, the Alternative Investment Market for smaller companies, and The Official List for government and state holdings.
One of the newest of these markets is The Alternative Investment Market. This has recently been rebranded as The UK's most innovative growth market.
It has been created to provide a company with a way to list on London's largest equity index without having to meet other qualifications like using older share classes or lower free-float limits.
Is the FTSE AIM Market safe?
Investing in the Footsie aim market can be a very rewarding experience, but it does have it’s pitfalls.
Whilst any stock market can rise and fall in value from day-to-day and week to week, the AIM market can have quite significant lurches both upwards and downwards, known as volatility, and new investors should be aware of these movements before they decide to invest in the AIM market.
It is also fair to say that it is more likely that a small company in the AIM market will completely fail than it would be for a blue chip Footsie 100 company to fail.
This additional risk maybe one of the reasons that the government allow certain tax benefits and inheritance tax benefits for investors in the junior aim market.
Finding out more about investing on the AIM index
The London Stock Exchange's Alternative Investment Market (AIM) was established in 1995 to give smaller companies access to a wider range of investors and a secondary trading platform.
It allows investors who do not meet their full eligibility requirements for the main stock exchange to invest in stocks that otherwise would be ineligible.
London-based AIM is widely considered one of the most flexible capital markets around, with only £1 million minimum for an initial public offering and open share trading on all days of the week.
It also lists more mining companies than any other index, making it well suited for emerging economies like Brazil and India, which currently produce 40% of all globally traded mined commodities.
The AIM Market - Bottom Line
The FTSE AIM index is a measure of UK mid-cap stocks listed on the London Stock Exchange's (LSE) alternative markets: Aim.
The index consists of about 400 stocks, and together these companies represent approximately 30% of total market capitalization in the LSE's international stock sector.