LIC & LIT Listed Investment Companies (LICs) 2019

Discussion in 'Shares & Funds' started by Nodrog, 1st Jan, 2019.

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  1. RayO

    RayO Well-Known Member

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  2. Tink

    Tink Well-Known Member

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    I see today
    Whitefield Limited is at $4.21 -10.43%
    Milton Corporation Limited $4.31 -6.30%
    Argo Investments Limited $7.58 -4.29%
    Australian Foundation Investment $6.00 -3.38%
    Is it as simple as if you are a long term buy and hold investor, would WHF be the better buy at the deeper discount?
     
  3. Froxy

    Froxy Well-Known Member

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    What NTA date are you using as I am getting WHF around 5 MLT around 3 and ARG and AFI at premium. I like the idea of consistently buying the WHFs and AUIs at a discount over the long term but in saying that more often then not i have bought recently at a discount thinking id scored a bargain only for the price to drop the next day. Other times i could have bought at premium but at a cheaper price but didnt as it didn't "look cheap".
     
  4. Famil Man

    Famil Man Well-Known Member

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    For someone in the early accumulation days at what point would you consider diversifying.
    So at the moment i am 100% MLT.
    But only at a small value of $15k. I plan to keep buying as savings permit.
    Is it just what the investor is comfortable with in terms of exposure?
    Would it be silly to keep topping up MLT if buying at a 'good' price?
     
  5. SatayKing

    SatayKing Well-Known Member

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    Hi @Famil Man.

    First, what do you mean by diversifying? Smaller companies, international and the like?

    If you mean not to have only MLT but include some of the larger and old-school LICs such as ARG, I think they all do much of the same thing really. All have similar weightings but do occasionally tinker around the edges.

    Personally, I don't consider it silly to keep buying one particular LIC if it suits your purpose. To continually invest is the best thing going and way better than doing nothing as far as I'm concerned. However, it is entirely up to you taking into account the funds you have and your family circumstances. No one rule to fit all in that regard.

    At one stage many moons ago I held mostly LIC's with an Australian focus with PMC as my international exposure. I've changed that over time because it suited my thinking and attitude which altered.

    All the best.
     
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  6. SatayKing

    SatayKing Well-Known Member

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    Didn't take long did it?:)
     
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  7. DoggaPP

    DoggaPP Well-Known Member

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    No that would not be silly at all as it is a solid, reliable dividend payer. I hold all the big old LIC's so if a share offer comes along I get to benefit from all, not just one. Also holding more than 1 LIC means that you are psreading risk a little across managers/LIC's and some LIC's have a different dividend pay cycle which can be helpful to smooth the flow of dividends (useful when retired maybe?). AFI and WHF offer DSSP/BSP too which the others do not.

    Just some thoughts, not advice DYOR.
     
  8. Tink

    Tink Well-Known Member

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    Sorry, they were prices on the ASX yesterday and discount from prices 3 months prior
     
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  9. Nodrog

    Nodrog Well-Known Member

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    Also not like we had much choice with International back then either.
     
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  10. SatayKing

    SatayKing Well-Known Member

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    Spot on @Nodrog.

    As you know you can only invest in products available at one particular time. However, as more come to the market the product should be considered even if the idea of investing in it is given the flick within a couple of minutes.
     
  11. Nodrog

    Nodrog Well-Known Member

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    And I still hold PMC even after my recent portfolio simplification. High fees a negative but something international / different and mostly purchased cheaply at a rare discount. I doubt it’ll outperform the main MSCI International index but can’t complain about the income and it’s about as close as I want to be to a partial tilt in Asia / EM.

    When it comes to PMC despite any perceived negatives by others I take that famous view so wisely phrased by you - IT’S ALL ABOUT ME:).
     
  12. DoggaPP

    DoggaPP Well-Known Member

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    The fully franked dividends paid by PMC seems far more than we would get from say IVV or VGS - that's still a positive even these days surely?
     
  13. SatayKing

    SatayKing Well-Known Member

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    Well I can only express an opinion @DoggaPP as it's entirely up to you where, when and how you invest your available funds.

    My approach is I don't take franking into account when I invest.

    From my perspective franking credits only comes into play at tax time and I don't invest with that in mind. I will either get a refund under current taxation arrangements - although it's unlikely in my case - or I wont. I certainly won't be holding my breath hoping to live off a tax refund in any event. It's too iffy for me to consider it really.

    The cash component which regularly goes into my bank every six months or each quarter is the all important aspect for me.

    Whenever I did receive a refund I never spent it on living expenses anyway. Went back into the market with a silent thank you to the Tax Office for the gift of Mammon. If no refund, then no harm done.

    Oh my, such a selfish attitude. I fully agree with it too.
     
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  14. DoggaPP

    DoggaPP Well-Known Member

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    True - yes. However at roughly 5% without the extra of franking (to your point) it's a fairly pretty decent div yield compared to IVV or VGS nevertheless.
     
  15. SatayKing

    SatayKing Well-Known Member

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    Tongue in cheek but as the matter of when to buy is often raised in these threads.

    So with that in mind you could apply SK's First Rule of Stupidity. Buy when the market is going down and never when it's going up. That way you'll always buy at the bottom but you won't know when it's been reached.

    I never abide by the rule I'll have you know. That's the Second Rule.
     
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  16. Nodrog

    Nodrog Well-Known Member

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    PMC actively trades (almost hedge fund like in some aspects) whereas the others don’t. PMC is likely to provide greater income even excluding franking credits but less capital growth and the others vice versa. Looking at “total” return the odds in theory favour passive index ETFs.

    You just need to decide which is best based on the “it’s all about me” principle:).
     
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  17. DoggaPP

    DoggaPP Well-Known Member

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    OK, understood.
    Hmmm, I may be wallowing in my own pool of confirmation bias here, but I think I would prefer to take my gains in earnings across time than to have all those gains offered up to the tender mercies of sequencing risk when I retire (only 5 years away now)

    Edit: typo
     
  18. Nodrog

    Nodrog Well-Known Member

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    PMC through trading / hedging etc is likely realising capital in part which through the company structure is paid to the investor as franked dividends. It’s not like normal dividends from the underlying portfolio simply being passed through to the investor. So one needs to have confidence in the trading ability of PMC. The traders may also struggle in tough times? Are there also sufficient reserves to top up dividends when trading doesn’t deliver? And for how long?

    I’m personally in no rush to invest heavily in International equity ETFs either given the current risks especially when I can get a better yield on cash than say VGS. Leading into and in the early stages of retirement is not the time for throwing caution to the wind at least in my view and in our circumstances. Perhaps I’m becoming a conservative old fart.
     
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  19. Snowball

    Snowball Well-Known Member

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    Important to remember that back in 2010 (I think) PMC ran out of profit reserves (harvested capital gains) and were forced to cut the dividend completely.

    It’s been more reliable since then but it’s still a possibility with these trading focused LICs including those managed by Wilson.
     
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  20. Nodrog

    Nodrog Well-Known Member

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    Post July 2010 the main reason was this:
    Which reminds me that my previous comment was not entirely accurate and explanatory enough.
     
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