LIC & LIT Listed Investment Companies (LICs) in 2016

{Note - thread continued from here: Listed Investment Companies (LICs)}

 

WAM, my market darling before my Commercial purchase where I had to sell out a very significant sum, has reported a 248% increase in profits. I have no skin left in the game, but reiterates how good some LICs can be, even trading at premium.

Dividend slightly disappointing though, only 7.25c as opposed to 7.5c estimate.

I still think we will see some movement upwards today though.

pinkboy

 

I think WAM is indeed a quality outfit. Pity the premium has always put me off.

WMK also doing very well for me (the one i discussed above). I think the recent listing of AEG, along with the current volatility, has led to increased interest in market neutral strategies.

 

Some more detailed coverage of selected LICs:

https://dpsi7pmz5b6vt.cloudfront.net/uploads/media/2474/LMI_December_2015.pdf

 

i put in for some monash invest IPO shares..another long/short fund..with a decent track record in the unlisted version, almost 16% pa (but only from inception in 2012)

AEG having a shocking month..hope it keeps dropping as i want a few

 

Any suggestions on Lic investing outside of asx 20 for good diversification

I am aware of QVE, any other LICs to consider?

 

As a newbie, I have just bought some VAS yesterday. On my calculations, QVE is currently trading at slight discount to NTA and MLT appears to be only slight premium to NTA, making both relatively good value? Reading the thread, people have commented on not loading up on LICs due to their significant premium to NTA.

If one is interested in MLT and QVE, is now as good a time as any? (not talking about market timing but mainly in relation to share price to NTA). Or should I get more ETFs instead?

 

MIR (I hold), but quite expensive at the moment. However you could consider buying a tiny stake in it. That way when there is a discounted Share Purchase Plan down the track (minus brokerage as well) as a shareholder you will be entitled to participate. Offers are up to a maximum of $15K each time. May or may not wipe out the premium but one way of potentially reducing it.

Go here to check it out:

Mirra ( Home )

Run by the same mob who manage AFI.

It is worthwhile reading stuff on their site and other quality LIC sites. You will learn a lot.

Note: not to be taken as advice, general info only.

 

QVE is currently at a fair discount to NTA (Apr 29 SP 104cps, NTA 108.5cps). Good long term buying at the moment IMHO. Havent looked at MLT. But there has been some recent discussion around whether NTA based buying really matters for long term accumulators, and the consensus is over the long term...not really.

 

To put LIC discount / premium issue into perspective check out this old Thornhill article.

Article :: Listed Investment Companies

and a post by one of the Forum's highly respected experienced investors (Keithj) here:

What's looking cheap on the ASX?

In the long term the premium is not as big a deal as one would think within reason of course.

As long term investments I personally consider MLT and QVE (wonderful selections by the way) to be dramatically superior to VAS and related ETFs in general.

Even without doing a detailed calculation they both look reasonable value at the moment. However if one was taking into account "quality" as well in comparison to the likes of VAS one might consider them excellent buying!

Note: I'm not liscenced to give advice, general info only.

PS: sorry whilst replying I didn't see The Falcon's post so mine somewhat repeats part of his excellent comments.

 

One thing i particularly like about QVE is that it gives you an Investor's Mutual investment (whose investing philosophy appeals to re: discipline, income focus, and their track record) but with more dividend smoothing aspects of an LIC rather than their managed funds. I wonder if Thornhill would hold them, as it would seem to tick most of his boxes...

 

He told me ages ago that other than the older LICs the only other fund he held was IML Small Companies fund. QVE would have similar holdings. Trying to pick small caps is often too hard and risky for the average investor. Thornhill and Anton T (founder of IML) were former work colleagues hence Peter knew well and truly just how good Anton T is.

Funnily enough I have a significant holding in QVE and to a lesser extent MIR for mid/small cap exposure.

 

Thanks austing. Yes i remember someone here saying he held the IML small cap fund. However I've also seen him post recently (over at cuffelinks) about how he didn't like the variable distributions of income and capital gains associated with managed funds. So i was thinking QVE would solve that issue for him...

 

That someone was me.

Yes, he typically hates unlisted managed funds. He also doesn't like resources in his older LIC holdings. And he doesn't like stapled securities (ie combined company and A-REIT). He holds / has held all of these. As I have mentioned a few times Peter told me that one has to be pragmatic about all this. Sometimes there are magnificent shares and funds out there worth holding even if they don't "fully" meet the Industrial approach criteria.

He, like many sensible investors acknowledges that trying to pick small caps is best left to a proven specialist fund manager. Hence given that an excellent small cap LIC didn't exist until relatively recently Peter had no choice but to take the unlisted managed fund route for small caps which are important in diversification and growth of ones Industrial portfolio.

Perhaps now that QVE is available he might hold but I assume he certainly wouldn't sell his IML small cap fund after all this time. Also adding QVE now would be duplication.

It's been a long time since I last communicated with Peter so I'm not right up to date with what he has done in more recent times. However I doubt things have changed much.

Important with all this stuff don't get tied up in knots trying to implement a strategy to perfection. It may result in a less optimal outcome, be flexible and pragmatic.

Cheers
Gordon

 

Per the last monthly report at the ASX website some of the most discussed LICs (here) are trading near NTA or at a discount.

Very happy as I got some MLT, WHF, BKI, QVE, MFF in the past week at or near discount (unless things have changed significantly from when it came out), along with PMC, I paid a (hefty) premium on PMC. Trying to build a base for a set and forget portfolio and was ignoring NTA premium/discounts so more good luck in my timing than anything else.

I also jumped on a couple of ETFs.

 

Good stuff @Hodor.

A wonderful set and forget line up there. Let these excellent managers do the work for an overall low fee whilst you get on with enjoying life. Bliss on a stick!

Cheers

 

Yep wasn't suggesting he swaps over or anything busting, just highlighting the extra benefits of QVE for income dependability. But as usual your comments on not fiddling too much / looking for perfection are very much what I need to be reminded of now and then

 

...that should say austing.

Haha gotta love autocorrect

 

Hi DingoMaster (oops autocorrect again),

Busting here.

Re QVE all that's needed now is for the dividend to rise. I'm expecting it will at least get to 4% plus fully or mostly fully franked. Doesn't sound like a high initial yield but with a small / mid cap fund it is the "growth" of the dividend that we are after. Always be aware of the potential "yield trap" with assets offering a high upfront yield. Note also that QVE being a new fund and a value manager it takes awhile for the dividend to build. However by then it is highly unlikely one will be able to purchase it at the current price levels.

Given IML's track record I have high expectations for this LIC.

Cheers
Busting

 

With my first IP settling at the end of this week, I'm looking at the stock market for investment for the next couple of years as I think it will be difficult for me to get finance for a while, plus I would like to start creating a long term income stream. Once again thank you austing & The Falcon for your helpful posts.

As I have young kids and the wife will be out of work for a while, I will be investing under her name so the franking/tax credits are more useful to us. Being on a single income, 2 kids and now 2 mortgages I am currently looking at only putting aside approx $450 a fortnight into the commsec account for shares, I have a good idea what LIC's and ETF's to purchase but my question is how often do you guys purchase?

Obviously buying every fortnight is no good due to the broker fees that I would encounter ($520 pa), but only buying once a year ($20 pa) seems harder to diversify plus I'll miss out on growth and dividends. At this stage I was thinking about 1 purchase every 2 months (9 weeks).