We are proud to present our second annual form guide for the 'LIC Cup'. This race is even bigger than the Melbourne Cup! There is approximately $35 billion of gamblers' (investors') money at stake in this sector, so the stakes are certainly a lot higher! Show More
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Much has been written about the plan by the Federal opposition (likely to be the next Government) to abolish franking credit refunds. Along with removing negative gearing for existing housing and a 30% minimum tax rate on family trust distributions, this amounts to a three-pronged attack on Australian investors. Show More
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LICs continue to rise in popularity, and luckily for investors, the number, and variety, on offer continues to increase. Some of the more recent prominent IPOs include WAM Global Limited (WGB), L1 Long Short Fund (LSF) and the Gryphon Capital Income Trust (GCI). Together, these three LICs account for around... Show More
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There are now over 100 LIC’s (plus some Listed Investment Trusts, or LITs) on the ASX. The main difference between a LIC and a LIT is tax: LITs help to avoid the great "Labor Franking Credit Grab". In this wire, we examine this theme, as well as four other important... Show More
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While we believe that over the longer-term, smaller companies provide more opportunities to outperform compared to larger ones, rarely have we seen such a large performance gap between the two as we have over the last 12 months. Show More
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At the start of February, markets reminded investors that shares don’t always go up in a straight line. The Australian market dropped over 5% from its recent highs, and the US market dropped over 10% from its top. Considering the gains in the market over the past year, these are... Show More
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To win the Melbourne Cup requires a horse that is well trained, has a great jockey, and importantly hasn’t been hit too hard with a weight handicap from the stewards. To win the "Affluence LIC Cup", an LIC requires many of the same attributes... Show More
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Every month, we provide a snapshot of the Affluence Investment Fund portfolio to our investors. We always include the two following charts to help people understand how we have positioned the portfolio: Show More
Below are three LIC’s we believe are currently some of the most attractive. As at 23 August 2017, all three are significant holdings in the Affluence LIC Fund. But first, a brief update on some key events in the sector. Show More
Through LICs you can access many different managers, asset classes, geographies and investment strategies. One of our funds invests only in LICs, so we spend a lot of time looking for investment opportunities in the sector. Here are ten things you need to consider before making any LIC investment. Show More
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We know, you have probably heard this all before, but it is still one of the most fascinating investing phenomena out there: The miracle of compound interest! Here’s an example... Show More
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The Federal budget announcement that deductions for travel costs and certain depreciation allowances will no longer be available to landlords of residential property is a potential game-changer for residential property. These changes, combined with other changes to curb foreign buyer demand, are relatively small in terms of their market impact.... Show More
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We are at an interesting stage in the cycle, with the ASX 200 hovering around recent highs, global equities looking expensive, and calls for boom and bust from different forecasters and commentators. At Affluence we know we don’t know the future, but we can assess current opportunities. Below are three... Show More
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The Affluence Team have been investing in commercial property (think shopping centres, office buildings and industrial sheds) for a long time. But over the past 18 months, we've reduced our property allocation in the Affluence Fund from around 25% of the portfolio to about 10%. Show More
It seems like we’ve been hearing about how expensive markets are for years. But with limited exceptions, most markets have continued to track higher and higher. Which brings with it a dilemma. It feels ever more uncomfortable putting money to work, but there’s no guarantees markets won’t keep going up.... Show More
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Mark Twain once said, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” Show More
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Late last year we identified gold stocks as the greatest contrarian play of 2016 and made an investment in a Gold Miners Fund. Show More
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With over 100 quality LICs to choose from, there's now some great buying in this space. We're often asked which LICs we love the most so here's six of our current favourites, in no particular order. We bet you've never heard of some of them. Show More
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Markets don't like uncertainty, so they fell in the March Quarter. At Affluence, we love uncertainty. It makes things much cheaper than they ought to be. Show More
We are by no means gold bugs. We don’t usually like investment opportunities that deliver no yield. But gold miners share prices have been slammed even more than physical gold, to the point where early this year they were looking very cheap. Show More
Hi Ian. You raise a very good point. Much like property and infrastructure, there tends to be a lag between valuations for PE businesses and market pricing. This can work in your favour when markets are going well, but the reverse is true in downturns. It can also be useful to review the valuation policy of the manager. Overall, we tend to look for a bigger discount than normal for any LIC investing in illiquid assets such as private equity.
Hi Tony. The LICs I referred to were the Asian Masters Fund (EAF) which was previously AUF. The Australian Governance Masters Index Fund (AQF) has also recently approved a similar restructure. Both are part of the Dixon/Evans and Partners stable of LICs.
Hi Peter. There are some ETF's that are short the market (e.g. Betashares Equities Bear Fund, ASX code: BEAR), but no LICs that we are aware of. Some LICs, such as ALF or CDM could potentially be net short at times, but I would say it would be rare.
Some great comments in here and it’s probably worth highlighting how we assess the likely winners. Certainly, to be first over any extended period in the LIC space, you need to have good investment performance from the manager. So, every one of our 24 runners are ones we think can outperform markets over the long term. But to come first, second or third needs something extra. In the case of LIC’s, that extra usually comes from positive changes in the discount/premium to NTA. For example, if a LIC goes from a 5% discount to a 5% premium, the total return for a shareholder is improved by 10%. Our favourites are those we believe have the best combination of potential for good investment performance AND potential for improvement in the NTA discount/premium. These are unlikely to be last year’s winners, nor those already trading at decent premiums to NTA.
On If 24 LICs ran the Melbourne Cup... which would be our favourites? -
Michael, I think there's merit in both. Both ETFs and LICs continue to grow strongly. We like LICs because of the price inefficiencies we can exploit. But you're right about ETFs - there's more choice and price/NTA certainty. We sometimes use ETF's as an alternative if we just want pure market exposure. Each investor will have their own preferences and it's good to have a choice.
Thanks Jordan. It's certainly something we try to keep a very close eye on. A decent fall in house prices is probably going to have a very big impact on our economy. We want to know about it as early as we can..
Thanks Adam. We're about to make the Affluence Fund available to retail clients in the next few days and we're targeting research for later this year.