3 top picks in LICs
ASX Listed Investment Companies (LICs) and Listed Investment Trusts (LITs) grew 6.7% in size to $45.1bn over the June 2019 quarter. The 60 securities covered within this report collectively returned 3.0% (incl. net dividends) for the quarter, whilst making up 92.7% of the total sector based on market capitalisation.
There were 4 new listings, all LITs, which added over $1.2bn in new capital. The largest IPO was Perpetual Credit Income Trust (PCI) which raised $440m in April to implement an actively managed portfolio of domestic and global credit and fixed income assets that targets a distribution of the RBA Cash Rate + 3.25% p.a. (net of fees).
$674m was raised in secondary offerings, $47m from option exercises and $19m in Dividend Reinvestment Plans. MCP Master Income Trust (MXT) successfully raised over $545m via an Entitlement Offer and Placement, taking the total market capitalisation to over $1.3bn.
The top performing LIC/LIT was URB Investments Limited (URB) with a market return of 14.8%, compared to a pre-tax NTA return of 3.6%.
Uncertainty in the sector rose leading into the Federal Election in mid-May, resulted in a widening of share price discounts to NTA and large divergences between market returns and that of the underlying portfolios.
In our 88-page quarterly report, we review the sector, provide a one-page summary on each LIC that we cover, and also nominate our top three picks. Access the report here.
10 stocks mentioned
Will provides comprehensive coverage of the ETF and LIC sectors, producing a range of highly regarded reports covering investment fundamentals, asset class structure and cost, and the role of managed investments in portfolios.