As investors in London’s junior AIM market know only too well, high risk does not always mean high return. Now, more than ever, the Alternative Investment Market of the London Stock Exchange needs to prove that it can offer investors high-quality companies.

The FTSE Small Cap index of smaller companies listed on the main London market has outperformed the AIM 100 index on the way down, and on the way back up. The FTSE Small Cap has gained almost 30 percent over the last couple of months, while the AIM 100 has risen 20 percent.

And that’s after the AIM 100 saw falls of over 50 percent in the past year, much more than the 27 percent posted by the FTSE Small Cap index.

While liquid companies like Advanced Medical Solutions and Cape typify the benefits of AIM, there are too many that have cut back so much that they are reduced to a CEO operating alone out of his spare bedroom.

AIM officials said on Friday that they thought the market has had its best month for a year, raising around 500 million pounds for companies, but this includes 220 million pounds raised by one company alone, Max Properties.

Fund managers say that they like some AIM companies that are making profits, or close to that point. However high-risk beta stocks that expect investors to hang around for five years or more should be happy that the winter weather has cleared, because they’re likely to spend most of their time with their caps in their hands.

If AIM wants to see its companies grow fruitfully as cash returns to the market, it will have to start out by sifting the chaff from the wheat.

It's fair to say that investing in Iraq is not for the faint-hearted.

Just last week more than 200 people were killed in suicide bombings across the country, while kidnapping and armed assault remain commonplace.

That said, more than 600 delegates still turned up to the Invest Iraq 2009 conference held in London this week, eager to find out what opportunities there might be in the oil, construction, petrochemicals, engineering, agriculture, transport and tourism industries, to name a few.

From City of London bankers to executives from Shell and Chevron, bosses from energy service companies and airport construction firms, management training specialists and security advisers, they were all there, milling around a west London hotel in their smartest suits, seeing what business they might be able to do.

There were plenty of Iraqis too. Mostly businessmen with operations outside the country -- in Lebanon, Jordan or Dubai -- and now looking to step up investment in their homeland.

Some of them, perhaps feeling more familiar with the lay of the land than Western investors, had already made sizeable moves into Iraq, but judging from the questions they were putting to the Iraqi officials speaking at the conference, they were concerned about a lack of legal direction from the government.

One Iraqi was particularly illustrative of the potential pitfalls that can befall investors.

During a seminar on Iraq's new investment law, which is supposed to make it quicker and easier to pour money into the country, he stood up to ask a question. Dressed in a smart pinstripe suit, he looked every part the international entrepreneur as he grabbed the mircophone.

"I am worried," he said, his concern audible in his voice. "I have $400 million invested in Iraq. I have built several hotels already and I am just completing the construction of a new 400-room, five-star hotel in Kerbala," he said, referring to a religious city in southern Iraq that is a popular destination for religious tourism.

"I am worried," he continued, "because I do not yet have planning permission for any of the buildings."

There was silence in the room as the audience digested just how out on a limb he was.

"Have you asked for it?" a government representative on the panel asked.

"Yes," said the man. "I asked three years ago and I keep asking but I have heard nothing."

After a pause the government official mumbled something about the issue being tackled: "This is something that regional authorities should be looking at. They need to speed up the process," he said, before moving on to the next question.

The businessman did not look particularly reassured as he sat back down.