LIC & LIT Listed Investment Companies (LICs) Q1 2018

Discussion in 'Shares & Funds' started by The Falcon, 1st Jan, 2018.

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  1. PKFFW

    PKFFW Well-Known Member

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    In the harsh light of morning and with the help of the esteemed PC members, it is clear I hadn't thought of how the acronym could be pronounced. Either letter by letter or as a "word".

    S is a good example of the English language's idiosyncrasies. "SMSF" starts with an Es sound whilst "SCUBA" starts with a Ss sound.

    I can see I shall need to read everything aloud in many different ways before posting in future. ;)
     
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  2. kierank

    kierank Well-Known Member

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    So, am I an anal person or an an person :D?
     
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  3. Hodor

    Hodor Well-Known Member

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    It is not the vowel that determines the article you use it is the sound used when speaking the word, IE certain consonants by themselves are pronounced with a vowel sound. The article used can give you a hint as to how something is pronounced, have you ever heard anyone spell out SCUBA?
    Guess it gets confusing with LIC (lick) and SQL (sequel) are both spoken as words and spelt out.

    I don't believe English is specifically worse than other languages, though there are better and worse, it is just adopted so often as a second language these things get picked over more.

    ANYWAY.

    Who's buying DUI? Last time I spoke of it no one much was interested. Now it has already had a bit of a run over the past year or so does anyone feel differently?
     
  4. Nodrog

    Nodrog Well-Known Member

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    DUI, @SatayKing added it to his portfolio recently due to the International component. His usual view being that it pays a decent dividend and the Mgr does the work including choosing the International assets.
     
  5. dunno

    dunno Well-Known Member

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    It’s a reasonable LIC in my opinion. Some slight differentiation to the other low cost old LICs via some sensible gearing and international exposure, seems to demonstrate some more diverse investment thinking in their approach.

    To me though, Like all LIC’s it is worth considerably less under the Labor proposal to cancel imputation refunds than it is under current arrangements.

    So, between now and when this threat is either introduced or goes away a component of DUI’s market price will rise and fall on the markets prediction of Labor winning the election and getting the legislation passed.

    If you're accumulating and your capital today is far smaller than future capital is likely to be – accumulating through this potential paradigm shift is not a big deal. Maybe you get some good NTA discounts and the threat never gets implemented – Win Win.

    However if you are at the other end of the journey, I think LIC’s are a bad choice at these prices given the real threat of a structural change in value arising from legislation.

    I don’t have anything against LIC’s – Just need to be pragmatic to the risks. ETF’s side step the risk better until LIC’s reprice under the new regime or the threat goes away.
     
    Last edited: 28th Mar, 2018
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  6. @FruitCake@

    @FruitCake@ Well-Known Member

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    I created my Boardroom account today (interface is pretty meh imo) and I didn't realise that FGG didn't have a DRP option. Not a huge deal but I was surprised.

    Given the "carnage" last week I've created positions in the following MLT, ARG, BKI and FGG to accompany the AFI shares I bought awhile back. Deviating from initial rules a bit (smaller parcels than intended) but I expected an initially higher total brokerage cost this year as I build the base of our portfolio and get our foot in the door sooner if any SPP opportunities were to come about. Not too worried about allocations at this point, once I've built our "deck" I'll be saving larger parcels to reinforce the sections I want later.
     
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  7. Nodrog

    Nodrog Well-Known Member

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    Excellent commentary.

    Also it’s potentially likely the less popular and less liquid LICs will be rerated more harshly should Labor get it’s policy implemented.

    Note however that LICs held outside of Super and in most Public Offer Super Funds will still be beneficial. It’s SMSFs who are impacted mainly but are likely significant investors in LICs.
     
    Last edited: 28th Mar, 2018
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  8. dunno

    dunno Well-Known Member

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    Yes – unfortunately super and SMSF’s in particular seem to have been a total con.

    If they don’t change the rules further. I have 13 years of accumulation left before I can pull my money out – I fear access to withdraw will be denied before then and my money will be forever captive and subject to ever increasing rates of taxation to fund handouts to those that didn’t save.

    I share this sentiment which I saw in the media .

    "We've set up our affairs in good faith and now suddenly the rules could change. I've been a Labor voter all of my life but that's going to change."

    Sadly Liberal are no better when it comes to tampering with the rules.

    The deal was a tax advantaged structure for locking up funds. Surely the funds should be un-locked if they break their side of the deal and change the rules!!!! I would happily remove my money and be on a level playing field with everybody else outside of super. But alas us pre-preservation demographic are trapped and our retirement bounties will be continually pillaged by the non–saving majority who vote to keep their pension handout and medical subsidies funded.

    What a deal I have for you. A 15% contribution tax, an effective 30% earnings and pension tax (in relation to Australian equities) and a 15% death tax if there is anything left. All you have to do is lock up your money forever and have it subject to us raiding it when ever the demands of the non-saving majority dictate. Ummm I don’t think that is the deal I signed up for, but its fast becoming the reality. What a Mug - Salary sacrificing into super as young adults was a mistake in hindsight. The "sacrifice" back then was real in relative terms, but that's certainly not respected now.
     
    Last edited: 28th Mar, 2018
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  9. oracle

    oracle Well-Known Member

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    The one thing I have learnt from the past few weeks is as an investor we have choices to where we invest our money. If Australia decides to tax us more or keep changing rules the only logical thing to do is take our money and invest overseas. Unless you are retired and depended on income from investments you should actually focus on total returns and of the total returns if CG component is larger than income component it can only be good because now you have more money compounding for you rather than having to pay tax on income component and then re-investing what is remaining.

    Even if labour government completely backs down on their imputation credit changes I think I will still continue to diversify and invest overseas. Goal should be to have a portfolio that doesn't have home country risk. I am aware this will push down retirement goal by few years since income from overseas shares is lower 2.5%-3% on average compared to here where it is 4% + Franking credits. I guess you need to find the right balance between Australian and overseas shares but having a decent overseas exposure I believe is a must.

    Cheers,
    Oracle.
     
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  10. The Falcon

    The Falcon Well-Known Member

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    Happy to remain in Industry fund and salary sacrifice the extra few k over the maximum employer contribution base to get up the the $25k. We also sling the $25k deductible contribution to my non working spouse from trust as its a bit of a free kick.

    Non concessional contribs = no thank you.
     
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  11. The Falcon

    The Falcon Well-Known Member

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    Good learnings Oracle. If anything I hope that the recent posturing will open the eyes of many PT followers of the risk inherent with relying on the expectation that the future will look the like the past, and that we in the wonderful country of Australia are immune from sovereign risk. Not so.
     
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  12. Observer

    Observer Well-Known Member

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    That's why I don't really get some people (even here) talking about how wonderful the super is and how everyone should consider to sacrifice their salary/do extra contributions to super. Surely, it might be an ok structure if one can access the money soon (e.g. few years tops). However, for someone 20-30 years away from that point it just does not make sense.

    Australia has been more or less lucky so far that the government did not do any major changes or raids on peoples super (compared to some other countries where people were basically left with nothing after saving all their lives; e.g. my parents). However, it's such an easy target for the government to raid if/when **** hits the fan. Over that kind of timeframe there most likely be a myriad of changes to it (mostly negative me thinking). Thus, I've never been a fan of doing any extra super contributions (I would actually prefer for them to just give me that extra money and be done with it).
     
  13. KayTea

    KayTea Well-Known Member

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    I bought a tiny parcel about a month ago, just to dip my toe in the water.
     
  14. The Falcon

    The Falcon Well-Known Member

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  15. monk

    monk Well-Known Member

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    Saying that LICs held outside of super still beneficial.Is this because franking credits can be claimed against other income? If not can you please explain?
     
  16. jprops

    jprops Well-Known Member

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    Yes and your marginal tax rate will likely be higher
     
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  17. Rick65

    Rick65 Well-Known Member

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    If, as has been mentioned, LIC Share Prices will suffer with Labor's franking credit "scheme" then won't the same apply to other fully franked high dividend stocks ... The Banks, WES, WBC, TLS etc etc?
     
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  18. Nodrog

    Nodrog Well-Known Member

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    This view from Ashley Owens who is well known for his quality research. But anyone’s guess:
     
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  19. Rick65

    Rick65 Well-Known Member

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    Something else I wasn't aware of... :) Thanks Nodrog
     
  20. Snowball

    Snowball Well-Known Member

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    Yes still holding. Not large holdings, but still. Not happy if it’s true. Report inevitably biased, but could be with good reason.

    That’s what I get for trying to be fancy and add alternatives to my portfolio :oops:

    So their whole history could be a sham, performance figures and all. Though I don’t understand how their unlisted funds could have been so off the mark considering they report returns net of fees. Surely those investors would’ve noticed if realised returns didn’t match what they’re stating over the years.
     
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