Is the AIM market more risky than the main market?
In general, companies on AIM are less capitalised than their counterparts on the main market, and the received wisdom is that small companies are more risky than large ones because they are more easily blown off course. Smaller businesses are usually younger and not as well established in their markets. They are more vulnerable to competition, and because they have fewer resources they can have problems weathering a prolonged recession. So, on fundamentals, they are riskier. In recent years however, the share prices of even the largest companies have been volatile and there have even been big casualties – Marconi, for instance. So it is too simple to say that AIM is the riskier market, and to base your portfolio risk management on that premise. Ultimately, risk is about the quality of the companies you invest in, not the market on which they are listed.
Related Questions
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