Twenty years ago the London Stock Exchange's Alternative Investment Market (now known as Aim) began. The idea was to cut the cost of listing for smaller firms.
In some ways it has succeeded. Over the past two decades, over 3,500 companies have raised over £40bn on Aim. When you throw in secondary offers, the amount rises to £90bn.
The bad news is that it hasn't been so good for investors. Perhaps the most telling fact is that if you had invested £1,000 in the FTSE Aim index at the start of 1996, your money would have fallen to just under £727 today even if you had reinvested your dividends.
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In contrast, putting the same amount in the FTSE 100 would have given you £1,810.
Despite this, we're still fans of Aim and here's why.
Buying Aim shares comes with some generous tax breaks
Whether this is a good deal for the taxpayer is an open question. Around a fifth of shares are in foreign companies, which undermines the argument that it is benefiting British firms.
And of course, you should never invest in something simply because of the tax benefits. However, with some careful planning you can use it to boost your returns.
The most obvious bonus is that you don't have to pay stamp duty (which is charged at 0.5% for the main market) when you buy Aim shares.
But perhaps more significantly, if you hold certain Aim shares for more than two years they are classed as business property and therefore exempt from inheritance tax (IHT) when the owner dies.
The rules as to what shares qualify are complicated, but basically boil down to the fact that they are a real trading business (not an investment trust) and are not listed on any other exchange.
Lastly, in 2013 Aim shares were added the range of investments that you can include in your Individual Savings Account (Isa). Shares held in this way are exempt from income tax or capital gains tax. Previously Aim shares weren't Isa-eligible, unlike stocks that had a full listing on the main market.
Aim contains a small number of hidden diamonds
Even experienced investors will need to do a lot of homework before jumping in you can't make any assumptions about the companies that you are investing in.
However, the flip side of this is that because of the exchange's bad reputation, even good companies are tarred with the same brush. A lack of interest from analysts, who only tend to cover larger shares, means that bargains tend to slip through the cracks.
Indeed, while the market as a whole hasn't performed that well, there have been some spectacular success stories.
Perhaps the most well-known of them has been Asos, the online retailer. In the aftermath of the bursting of the tech bubble, it was worth only 3p a share. Currently it is trading over 1,000 times higher at £36.50 a share.
A more recent success story is technology incubatorAmphion Innovations, which has seen its shares shoot up over five times in the last six months after winning a patent case.
Of course, these companies can be extremely volatile. Asos was worth over £75 around 18 months ago, for example, but has fallen on concerns about slower growth.
However, a surprisingly large number of Aim companies have produced outsized returns. Over the past year, 38 companies have at least doubled their value compared with a year ago, while a further 64 have gone up by at least 50%.
Two Aim stocks for bold investors to buy now
Alliance Pharma (Aim: APH)
It has a portfolio covering over 50 treatments, and specialises in cancer and dermatology drugs. In April it bought MacuVision, which has a successful treatment for macular degeneration, an age-related eye problem.
Despite the fact that Alliance Pharma's share price has risen by over 20% since we last tipped it in November, it still trades at only 10.3 times forecast 2016 earnings.
However, if you really you want to try your luck, you might consider Applied Graphene Materials (Aim: AGM).
Graphene is a supermaterial' that's got the scientific community buzzing. Despite the fact that it's only one atom thick, it is extremely strong and able to conduct electricity very well. BCC Research, a market research firm, has forecast that the market for the material could be worth $675m a year in five years' time as it begins to enter commercial use.
AGM, which was spun out of the University of Durham, has developed a process to manufacture graphene. Earlier this week this process received a patent that could put it at the forefront of the race to develop this material.
The firm is not yet making profits, but has already agreed production deals with several major companies. While this is undoubtedly a high-risk investment, it could be a way to get in early on what may turn out to be a major new technology.
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
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