LIC & LIT Listed Investment Companies (LICs) Q4 2018

Discussion in 'Shares & Funds' started by Pleep, 1st Oct, 2018.

Join Australia's most dynamic and respected property investment community
Thread Status:
Not open for further replies.
  1. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,376
    Location:
    Buderim
  2. DoggaPP

    DoggaPP Well-Known Member

    Joined:
    23rd Jul, 2018
    Posts:
    319
    Location:
    Lake Macquarie NSW Australia
    This has been a long time coming it seems. My wife holds both via an inheritance (would not have bought either otherwise) and we are just ploughing the dividends back into core her LIC's holdings. Because these were inherited, the cost base is that of the original owner so we will wait for retirement to trigger CGT here (another 5 years yet).
     
  3. Zenith Chaos

    Zenith Chaos Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    1,673
    Location:
    Sydney
    Does it make things that much simpler with fewer holdings? Everything is digital so tax time isn't much different between 2 and 20 holdings. CGT and brokerage aside, it goes against rule number 1, never sell.

    @Nodrog are you closing the family trust due to ongoing expenses? Are there no more benefits in this structure?
     
  4. SatayKing

    SatayKing Well-Known Member

    Joined:
    20th Sep, 2017
    Posts:
    10,726
    Location:
    Extended Sabatical
    What you say is true @Zenith Chaos where digital is available. Definitely is no hardship or much effort involved.

    And yet I was thinking about whether I would have done things differently.

    There would be a form of beauty come tax time to present four items; the annual statements for Oz ETF, O/S,ETF, Small Co's ETF and interest earned although that would most likely be auto-filled by the ATO.
     
    Nodrog and Zenith Chaos like this.
  5. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,376
    Location:
    Buderim
    OMG a young @SatayKing in today’s environment might be an indexer:eek::cool:.

    Indexing I suppose takes simplicity even further as one wouldn’t even need to consider SPPs / Rights Issues, dilution, NTA and structural issues with LICs being a company vs Trust if franking credit refunds are eliminated.

    Probably the one thing that some find attractive specific to LICs is their ability to smooth dividends. But really this is so easy to do yourself by simply maintaining a cash buffer.

    Tax wise one issue with ETFs since introduction of AMIT is having to adjust the cost base annually.

    I do like the single annual statement with ETFs though. No need to record anything. Just email the few annual ETF statements to the accountant / SMSF administrator.

    Not sure I’d want to own an ASX Small Coy ETF though given all the speculative mining rubbish in there. ASX Small Coys is a rare area where active has historically outperformed the index. An International Small Coy Index ETF would however be a lot more attractive.
     
  6. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,376
    Location:
    Buderim
    Mostly because It doesn’t offer any structural benefit to us anymore, the desire for simplicity and less stress / headaches with legislative risk. Of course it will eliminate another accounting expense. If Labor are elected and introduce the minimum 30% tax rate on Trust distributions we will be thankful that we’re out of the FamilyTrust as well. Also Labor is intending to cap deductible accounting expenses to $3K so those with costly structures to run could cop a hit.
     
    Parkzilla and Anne11 like this.
  7. SatayKing

    SatayKing Well-Known Member

    Joined:
    20th Sep, 2017
    Posts:
    10,726
    Location:
    Extended Sabatical
    Well, a yes and no index hound.

    For a couple of months I've been mulling over what I would have changed . I'm not going down the path of the Donald Rumsfeld conjecture but if I had any wisdom when younger – not that I have any now - what would I prefer currently? While the minimalistic approach certainly has an attraction to me, I've a feeling it does have some flaws.

    So, definitely ETF both Aus and O/S. Not active but pure passive index in my ideal world. For O/S no regional specific ETF's and unhedged.

    LIC's definitely. To my mind they'd be the (very) slightly active component. Able to participate in buy backs, etc. Probably a selection of one or two from ARG, AFI, MLT and AUI plus throw in MIR.

    I'd be comfortable with Aus 75% minimum, O/S 25% maximum (20% large, 5% small.) No selling to adjust but when money is there to invest get the balance back to where I'd prefer.

    Thoroughly boring and unexciting. The unthinking, ignorant person's investment style.:)
     
    sharon, oracle, trinity168 and 10 others like this.
  8. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,376
    Location:
    Buderim
    Talk about almost identical thinking. ASX 75% / Global 25% is what’s in our written investment plan. But we opted to leave out Global Small Caps given we’re older and around 5% allocation (max we’d be prepared to invest) is too small to have any meaningful impact on our portfolio.

    When we created our recent written plan (with wife significantly involved in the process this time) ideally the aim was to to trim holdings down to: VAS, ARG, MLT, BKI, MIR, VGS. But due to CGT issues we still also own AFI, WHF and PMC. So as you can see we’re not that far away from our ideal portfolio.

    BKI is the only iffy one for us but I’m giving it some benefit of the doubt over the long term because of these following unique attributes as posted the other day:
     
  9. KayTea

    KayTea Well-Known Member

    Joined:
    10th Aug, 2015
    Posts:
    1,204
    Location:
    Inside my head
    When it comes to comparing large/small caps, and Aus/OS options, in order to keep your total portfolio contribution weightings within certain guidelines/limits, how does everyone go about finding and comparing their options? Interested to find out what methods/systems people use.
     
  10. SatayKing

    SatayKing Well-Known Member

    Joined:
    20th Sep, 2017
    Posts:
    10,726
    Location:
    Extended Sabatical
    @KayTea I look at how much I have put into each holding and when I'm going to place more have a quick glance at yield, NTA if it's an LIC and go from there. Lot of gut feeling with me. Very scientific (not) and using a Ouija board would be considered by many to be more effective.
     
    Last edited by a moderator: 18th Nov, 2018
    KittyCat, Sannie and KayTea like this.
  11. Snowball

    Snowball Well-Known Member

    Joined:
    28th Dec, 2016
    Posts:
    843
    Location:
    Perth
    Oh and someone posted this short clip on reddit which I found highly entertaining, you guys might also.



    (and we're off topic again ;))
     
    astonma, Humphrey, sharon and 11 others like this.
  12. Froxy

    Froxy Well-Known Member

    Joined:
    22nd Sep, 2018
    Posts:
    209
    Location:
    Sydney
    @Nodrog what is your allocation to small/mid cap if you dont mind answering and what are your thoughts on AMH? Curious as we are building our portfolio and hold MIR currently. Obviously not attractive price wise ATM.
     
  13. Zenith Chaos

    Zenith Chaos Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    1,673
    Location:
    Sydney
    Thanks @Nodrog , @SatayKing and @Snowball , that's why this is such a good forum. Great answers on simplicity and MIR, and I get excellent insight into the LIC capital gains discount.

    Now the wait until MIR is at more tantalising levels.
     
  14. Zenith Chaos

    Zenith Chaos Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    1,673
    Location:
    Sydney
    I hold AMH and QVE.

    AFIC taps small caps
     
  15. SatayKing

    SatayKing Well-Known Member

    Joined:
    20th Sep, 2017
    Posts:
    10,726
    Location:
    Extended Sabatical
    Easy as @Zenith Chaos. If my disjointed thoughts are of any assistance it's what it's about. Of course, there is the issue of trying to untangle my sometimes convoluted and tangential ramblings.

    I don't know if it can be easily done but what I would like to see with dividends from LIC's is the ability to strip out any special dividends or possibly return of capital. I can look at a dividend history but it takes effort, to which I have an aversion, to work out by how much a dividend includes an LIC discount or special. One year it may be 10c with 4c LIC CG, the next 8c with 2c LIC CG. Could get very confusing for some I think. I roll with it but others may have difficulties.
     
    Zenith Chaos likes this.
  16. Famil Man

    Famil Man Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    60
    Location:
    Rockhampton
    MLT approaching 52 week low.
    I don't fully understand how LIC's are valued. If the after tax NTA is above the current share price, is that completely speculative? By rights the LIC is only really ever "worth" its NTA value?
     
  17. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,376
    Location:
    Buderim
    @SatayKing, is that you next to your mate Geoff Wilson:D?

    77CE3F15-24E9-4BA5-B5E4-B7472656B969.jpeg
     
    KittyCat, SatayKing, sharon and 2 others like this.
  18. Julian

    Julian Well-Known Member

    Joined:
    12th Sep, 2017
    Posts:
    52
    Location:
    Queensland
    I think this is a good article to read: How to invest in LICs like a pro
     
  19. pippen

    pippen Well-Known Member

    Joined:
    10th Aug, 2016
    Posts:
    1,428
    Location:
    australia
    Speaking of milton its trading at around a 2% discount estimated to nta at a share price of 4.32
     
    sharon, Anne11 and orangestreet like this.
  20. Famil Man

    Famil Man Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    60
    Location:
    Rockhampton
    I bought my first ever parcel of shares today, MLT at $4.330. Exciting times ahead.
     
    astonma, Redwing, KittyCat and 7 others like this.

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia

Thread Status:
Not open for further replies.