Why the worst is yet to come for Britain's inheritance tax-friendly stocks

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The past year has not been a good time for Aim investors, including those who follow our Inheritance Tax Portfolio of stocks we believe likely to be exempt from death duties.

The FTSE Aim All-Share index, the best barometer for the junior market as a whole, has fallen by 35pc over the past year and our own portfolio, healthily in the black for much of its life, now shows a loss of 6.3pc for readers who followed each of our tips.

We have underperformed the FTSE 100, for all its faults the benchmark for all our recommendations, by 1 percentage point.

It’s not hard to find reasons for Aim shares’ decline.

Stock markets across the globe have been falling for about the past year; the MSCI World index, for example, is 17.1pc lower than a year ago.

Only our own FTSE 100 has bucked the trend among major indices, thanks to its dominance by oil companies, miners and banks as well as the strength of the American dollar against the pound, which benefits its multinational constituents.

This is not to absolve ourselves of any blame: some of our stock selections have proved misconceived. While we deliberately chose a wide range of holdings, because the smaller, younger stocks to which Aim is home are inherently more risky, many have failed to live up to our expectations.

When companies are fundamentally sound, we will just have to soldier on and await more promising times, which, as we wrote on Thursday, should arrive towards the middle of next year if central banks, as expected, stop raising rates.

But we should also extend the exercise we carried out on Tuesday to our Aim stocks and rid ourselves of any that look ill placed to survive what looks likely to be a tough few months with their share prices intact.

We will therefore reluctantly pull the plug on Kromek, Tekmar, Naked Wines and Boohoo.com.

If you follow suit and want to preserve the tax break, be sure to reinvest, as the rules demand, the exact proceeds in another qualifying Aim stock.

Questor says: sell

Tickers: KMK, TGP, WINE, BOO

Share prices at close: 8.05p, 8.25p, 81.4p, 37.58p

Read the latest Questor column on telegraph.co.uk every Sunday, Tuesday, Wednesday, Thursday and Friday from 6am.

Read Questor’s rules of investment before you follow our tips.