AIM 100

socratez

I know the basics of shares and funds and tend to stick to tracker funds. I often check the FTSE 100 to see as it's doing. Partly as I have a ftse tracker fund and partly as I think it's a bit of a temperature check of the UK economic landscape.

I don't look at, or know much about the AIM apart from them being smaller market cap and more volatile investments. However I was surprised to see they do not even roughly follow the FTSE, and it's 50% down on the beginning of the year. Is this because the inflation, energy prices and geopolitical issues affect them more? Anyone want to shed light on what makes that market move?

Millyonare

Smaller companies (like those in AIM100) are always more volatile than big companies (like FTSE100), due to less liquidity, less analyst coverage, less finance, less skilled management, etc. The AIM index has always swung wildly up or down, for decades. It's perhaps even worse now, as the index is in decline, many firms are being flogged off abroad, fewer new companies are listing, and the remainder are chock-full of high-risk miners and oilers who promise gold at the end of the rainbow, but only if you can place another million pounds this quarter.

Linton

When economic conditions are difficult people are very wary about investing in higher risk shares. But there are always forced sellers, perhaps people who need cash now or executors dealing with an estate. Thus there is a downward pressure on higher risk share prices.

For AIM the situation is much worse because of illiquidity as Millyonare says. If  you have to sell but the company is so small and obscure that virtually no-one has ever heard of it you are going to give it away at a very low price to get any money back at all.

wmb194

socratez said:

I know the basics of shares and funds and tend to stick to tracker funds. I often check the FTSE 100 to see as it's doing. Partly as I have a ftse tracker fund and partly as I think it's a bit of a temperature check of the UK economic landscape.

I don't look at, or know much about the AIM apart from them being smaller market cap and more volatile investments. However I was surprised to see they do not even roughly follow the FTSE, and it's 50% down on the beginning of the year. Is this because the inflation, energy prices and geopolitical issues affect them more? Anyone want to shed light on what makes that market move?

Aim is a weird one because some of its constituents are relatively large - in the FTSE 250 range - whilst many are small cap. In addition to the previous comments, there has also always been a worry surrounding Aim's weaker listing and reporting standards relative to the LSE's usual standards. 

The trick with Aim has rarely been to buy the index but pick and choose the best companies from it.

The LSE's website has a list of its constituents:

https://www.londonstockexchange.com/indices/ftse-aim-100-index/constituents/table