Contrary to popular belief, you can put some AIM shares in an ISA.
AIM shares for your ISA? Hang on, that's not possible, is it? Aren't investors prohibited from holding AIM shares within an ISA?
That, I imagine, will have been the reaction of many of you. And certainly, there have been reports here on The Fool of investors being forced to sell ISA shares -- sometimes at a loss -- when companies have de-listed from the main market and moved to AIM instead.
But it's not quite that simple. In the Budget this week it was announced that a consultation will be launched this summer as to whether AIM shares should be allowed in. However, in certain circumstances, you can already hold AIM shares in an ISA. And some of the shares involved are worth taking a look at.
The restriction on AIM shares makes a lot of sense. ISAs are a government-backed scheme to encourage citizens to save -- for their old age, for instance -- and in that context, AIM shares must be considered riskier than main market listings.
By restricting investors to main market holdings, the government is trying to ensure that investors' savings will be there when needed, rather than swallowed up by some speculative and badly managed venture that subsequently went pop.
But the prohibition isn't a blanket ban. Investors can take stakes in AIM shares, provided that those shares are also listed on another recognised exchange. And not only do a number of AIM shares meet that criteria, they're also decent-sized businesses.
Such dual listings occur when a company's operations are overseas, and it lists on AIM as well as in its own country of incorporation.
I mentioned one such business last week: Asian Citrus Holdings (LSE: ACHL), which I wrote about back in September, since when it's climbed by 80% and thrown off a decent dividend.
But there are others -- including a number with decent-size market capitalisations.
Here, for instance, are five AIM shares all eligible for inclusion in an ISA, and each with a minimum market capitalisation of £400 million.
And for investors put off by corporate governance in emerging markets such as China -- Asian Citrus operates in China and is listed in Hong Kong -- all five are from the developed world: two from Australia, and three from Canada. Four are miners, one is an oily.
|Coal of Africa (LSE: CZA)||Australia||£689m|
|Medusa Mining (LSE: MML)||Australia||£404m|
|Eastern Platinum (LSE: ELR)||Canada||£616m|
|Western Coal (LSE: WTN)||Canada||£867m|
|Bankers Petroleum (LSE: BNK)||Canada||£1.42bn|
Will I be stuffing any of these into my own ISA? I'd need to do a lot more research. But on the face of things, these are decent-sized businesses that are headquartered in developed economies. Four of them are profitable, none of them pay a dividend, and the forecast P/E varies between 43 and 7.
Want to know more? For the miners, here's a good place to start. For the one oily, look here instead. And, as always, here on The Fool you can access, free of charge, full financial data and published RNS's.
> Time is running out if you want to use your tax-free ISA allowance for 2009/10. And remember, if you're 50 or over, your limit has now been increased to £10,200. Protect your investments from the taxman with a Motley Fool Self Select ISA.