LIC & LIT Listed Investment Companies (LICs) 2020

Seasons greetings all

i am almost sold on QVE for some ex20 diversification, survivorship being my last concern.

couldnt find FUM anywhere? Only states the IML fum not the QVE specific....anyone else had luck finding it?

 

$228m +/- the discount/premium per this
https://www.firstlinks.com.au/uploads/202012/LIC-Weekly-Report-Indicative-NTA-18-Dec-20.pdf

 

Thanks for that, it was $126M a few years back so looking ok

 

Are you referring to Assets rather than Funds under Management?

If the former, I think you can calculate that by dividing the market capitalisation by the closing share price and then multiplying by the latest announced NTA.

A bit iffy no matter what as I believe from some posts in this thread, QVE have been buying back shares as if there is no tomorrow.

Feel free to correct my muddy thinking.

 

It was funds under management thanks, i assume market cap is the same as fum?

Re: survivorship,is my thinking correct in that if QVE gets shutdown in 5 years time shareholders would get paid out at the NTA so not a total disaster, but real losses would be the shares bought cheap years ago that investors would miss out on the many years of increasing dividends and cap growth? As opposed to if I bought VAS instead and continued to benefit from continued increasing dividends and cap growth for 20+ years?

 

Nope.

Market capitalisation methodology

 

Will the last one out, please turn off the lights.

 

The headline is I consider a massive understatement from various aspects.

Nevertheless some stuff to read possibly before New Year's cheer takes hold and your vision becomes blurry - mine is already blurry but that's due to cataracts.

AFIC | A very challenging year: How AFIC saw 2020

"We are likely to see further rotation in the market towards value stocks in 2021. However, our focus will remain on high quality companies rather than looking at short term gains."

"A key challenge for banks going into 2021 will be the impact of bad debts. With the easing of stimulus, such as JobKeeper and JobSeeker, banks will no doubt keep an eye on the volume of defaults from borrowers that can no longer afford to service their debts. This is something we will also be focusing on as next year emerges."

"As 2020 ends, we believe the market is starting to look fully priced. Further growth in markets may be challenging depending on the earnings companies can deliver over the next twelve months."

And also in Our Company

"We aim to maintain a ‘nursery’ of smaller stocks in the portfolio and therefore remain constantly on the lookout for new companies that have the capacity to develop into major businesses over time. While such companies may be small, they typically exhibit similar characteristics to those in the core investment portfolio and provide AFIC with future growth options."

Plus its view on NTA Discount/Premium

AFIC | Discount vs Premium: how AFIC looks at NTA

 

When I think about it - I know; a very bad idea - I start to wonder why this in AFI rather than MIR?

Along with seeding capital of about $100m for international.

The buggers are supposed to be old, stodgy, boring index trackers aren't they?

Mind you Terry Campbell has moved on from being Chair and I wonder how long Ross Barker will be there given he is retiring from MIR shortly. The most recent addition to the Board was in 2019 and others have been there for close to 10 years or more. I've no particular view one way or the other but it's intriguing with these apparently recent innovations.

 

Have a little extra cash and are looking at WIC, SNC AND PIC any ideas on these stocks would be great as I need the experienced eyes help.
Happy New Year All

 

I cannot help you with either WIC or SNC as I know nothing about them. As for PIC I did hold at one stage but sold as part of a process to simplify the number of holdings. I haven't looked at it much since then apart from when it has occasionally been raised.

My only suggestion on all three is to look at the annual reports and in particular:

• the financials;
• the funds the managers receive for the efforts, or lack of;
• if there is a performance fee involved;
• how much any performance fee is;
• whether it goes to a management firm associated with any of the Directors (a high probability of a pf is in existence); and
  
• what the respective holdings are in each

If you are looking at basing a decision of yield alone that may not be a good indicator by itself.

 

Thank you SatayKing, for all your help and the rest of the PC people for all the LIC learnings this year. May we all collect plenty of dividends next year.

 

Why not just use the ETF EX20? I thought long and hard about the "big 3" in the space (EX20,MIR, QVE) and had settled on that order of preference with EX20 far in front, but then went with none of them. The real question for me is what problem was I trying to solve? If I want to diversify out of large cap Oz stocks then just go international (eg. VGS) or international hedged (eg. VGAD) if currency is my concern. If I want mid cap flavour then go overseas midcaps for more diversity (eg. IJH). Getting out of top 20 Australian stocks to me was more about trying to reduce sector exposure (resources, banks) which I feel I can achieve better and at lower cost using international diversification. Not saying you haven't thought about this, but getting it clear in my head what I was trying to achieve with every purchase really simplified things for me. Once I figured that out I could set the plan and be done with it as there is no valid reason to deviate from it.

What has really helped me is having just a few core index holdings which are different enough that I have no idea what my portfolio is doing day-to-day unless I specifically look. I've found that this has reduced my anxiety and worries every time I see a headline like "share market plunges xx% in worst day since zzzz".

I have 1) hedged international market weight (VGAD), 2) USA midcaps (IJH), 3) australian market weight (VAS) and 4) global market weight REITS split evenly in hedged (REIT) and unhedged (DJRE) form. I'm trying to keep these 4 roughly even with DCA every quarter year of a lump sum saved into the laggard. This gives me a lot of half and halfs - eg. Half USA and half other, half international hedged and half international unhedged, half international equity half other (REITs & oz shares). I'd originally planned on half Oz and half international, but couldn't find a way to diversify Oz enough as anything over a couple of years timeframe and the Ex20 and total index are very strongly correlated. So if the tv in the gym blared a "Share market to plunge" headline I know I'd be thinking about it that day. Now I've no idea which way my portfolio would go.

Is this optimal for tax/efficient frontier/etc.? Highly unlikely. Diversified? Seems that way, on the rare occasion I check its a mix of red and green. Long term (20+yrs) I'm reasonably comfortable that this will do good enough for me based on asset quilts, back testing etc. Short term it is too "quirky" to estimate the value of without logging into commsec, which I've managed to become good at ignoring. This has been the key psychological aspect for me.

Don't repeat this portfolio as it's one that suits my brain and may not suit yours. But hopefully something in this rambling can be useful.

 

Thanks for that insight Ross, i guess what stops me going along those lines is im a bit of a late starter to this and pretty low income and savings rate so my thinking was to focus more on aus as yield is higher. Unfortunately for me investing is not likely to result in fire but rather assist with child payments / school fees etc.....but you never know, hoping for compounding interest to work its magic as i am “only 41”.

which is more a Behavioural thing for me as i prefer dividends to selling down later in life.

i do have vgs and djre for diversification but not big amounts yet, would grow this later once id reached my target annual dividend.

havent experienced anxiety over share drops yet but time will tell if thats because i am good in this area or if its because my amount invested is not huge at this stage, hopefully the former.


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