The FTSE AIM UK 50 Index incorporates the 50 largest companies listed on the Alternative Investment Market (AIM), a sub-market of the London Stock Exchange. AIM is designed for smaller, growth-oriented companies, offering a platform for early-stage businesses to access capital and investors to engage with potentially high-growth opportunities.
FTSE AIM UK 50 Index Price, Chart & Dividend Yield
The index was launched in May 2005 and holds a range of companies across various sectors, including travel and leisure, telecommunications, computer services, construction and materials, mining and more.
The FTSE AIM UK 50 Index serves as a benchmark for tracking the performance of the top AIM-listed companies by market capitalisation and liquidity.
FTSE AIM UK 50 Index Top 10 Companies
The FTSE AIM UK 50 constituents are reviewed every quarter in March, June, September and December. By the end of 2024, the top 10 stocks in the index made up more than 45% of the weighting.
| Company | Weight |
|---|---|
| Jet2 | 10.27% |
| Gamma Communications | 7.30% |
| GB Group | 4.86% |
| Renew Holdings | 3.83% |
| Sigmaroc | 3.79% |
| Fevertree Drinks | 3.74% |
| Pan African Resources | 3.43% |
| James Halstead | 3.25% |
| Johnson Service Group | 3.13% |
| CVS Group | 3.04% |
FTSE AIM UK 50 Price Forecast
The Bull Argument: In a 2024 report, Octopus said it expects dividend yields on small-cap stocks in the UK to overtake the FTSE 100 in 2025. “The FTSE 100 is forecast to deliver dividend growth of just 22% over the 10 years to 2025. This is in stark comparison to FTSE AIM, where the overall cash dividend is forecast to have grown by over 82% in the same period,” said the firm.
Chris McVey, Fund Manager of the FP Octopus UK Multi Cap Income Fund, said that looking outside the largest UK stocks can help investors access a more sustainable and more diversified income. “Alongside the better dividend prospects, smaller companies can provide significantly better capital returns,” he stated.Â
Outside of dividends, Unicorn Asset Management believes there are several catalysts now evident that should help improve the performance of AIM stocks. “The combination of weaker share prices and stronger earnings has left many companies looking attractively valued, relative to their larger capitalisation peers,” said the firm. “A contributing factor has been a widespread misunderstanding of the relative risk of AIM companies. While there is certainly higher risk associated with speculative companies within the index, there are also plenty of well-established companies with strong business models, low debt and clear visibility on earnings.”
The Bear Argument: There are certainly reasons to be bullish on the index and AIM stocks, but there are also various reasons that many investors remain bearish. Volatility is one factor. The smaller-cap focus leads to greater price swings, which may deter risk-averse investors. In addition, many AIM companies are sensitive to changes in market conditions, particularly during economic downturns. Furthermore, there are liquidity risks. Smaller companies may face liquidity challenges, resulting in higher trading costs or difficulty in exiting positions.
Our View: Overall, the FTSE AIM UK 50 Index offers an opportunity for investors to engage with high-growth UK companies, an area that is lacking in the larger cap indices. However, research is key here and the higher risk and volatility associated with AIM-listed companies mean this index is best suited for investors with a higher risk tolerance.
Who Might Invest in the FTSE AIM UK 50
For those interested, while there are no ETFs aiming to replicate the Alternative Investment Market (AIM) or its main indices, there are funds that track UK small-cap stocks. However, these may be more suited to:
Growth-Oriented Investors: For the reasons explained earlier, small-cap stocks will suit those seeking exposure to innovative companies with significant growth potential.
Risk-Tolerant Investors: With the potential for enhanced growth comes enhanced risk. So, individuals who can withstand short-term volatility in pursuit of higher long-term returns may prefer the index.
Income-Focused Investors: This will be more specific to the fund you are assessing, but if we are to believe the analysis of Octopus, then dividend yields on UK small-cap and AIM stocks could grow significantly over the coming years, making them a potential option for income-focused investors.
Those seeking UK ETFs will find other FTSE oriented funds such as the FTAL, VMID, and the ISF which address other subsets of the UK market.
