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Adrian has recently been encouraged from his previous advisor to invest all of his available funds of £300000 into strictly AIM companies only. Adrian had explained to his advisor that he classes himself as a risk averse investor, therefore is seeking to create an investment portfolio which overall, has a smaller chance of failing, although is less likely to generate large returns.

The advice to purely invest into the Alternative Investment Market only does not meet Adrian’s investor profile. The AIM is a sub-market of the London Stock Exchange which lists smaller and up and coming companies which are seeking to gain an injection of capital to allow them to continue with their expansion. The shares that these companies issue are typically at a fraction of the cost of the companies that are listed on the main markets, and are also allowed to be traded with less regulation.

While investing into AIM companies does have its benefits, it would appear that these companies are better suited for investors who are willing to take on a higher level of risk in return for a large return, which is not suited to Adrian’s personality. As stated, AIM companies are smaller companies, typically within a high growth sector such as technology or oil. These companies however, have not been fully established, they typically do not have a proven track record for reporting consistent returns and are mostly reliant on a single product or project in order to be successful.

Among those concerns, there are several other risks involved with trading companies on the AIM. The shares that are listed are normally less researched than company shares on the main markets, with mostly only private investors looking to invest in these companies. With a much smaller level of interested investors looking to buy shares, these companies will typically be thinly traded. Thinly traded

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