A portent of things to come and 5 myths (or unknowns) about LICs

Rodney Lay

Risk Return Metrics

Welcome to the Risk Return Metrics Listed Investment Company (LIC) / Listed Investment Trust (LIT) Monthly for September 2021. 

Capital raising announcements over the month that may raise up to a maximum of approximately $975m and several more de-listings. 

Partly a portent of the way the sector will likely move, with a number of the LICs/LITs that raised capital being ideally suited to the closed ended structure. They have utilised that structure well, and they are ‘thriving’. It is this direction the sector will ultimately move, just as it did in the UK post that country’s abolition of stamping fees many moons ago. Namely, the progressive move to asset classes and strategies ideally suited to a close ended structure (read generally away from equities).

PM Capital proposes a merger, WAM counter bids

PM Capital Global Opportunities Fund (PGF) proposes a merger with sister LIC PM Capital Asian Opportunities Fund (PAF) only to have Geoff Wilson's WAM Capital WAM counter bid, utilising its premium to NTA ‘currency’. The irony is PM Capital may now be in the unenviable position to counter. The problem is if PGF counters on PAF materially in excess of the PAF NTA, which it may ultimately have to do, it will prove dilutive. In the interim, PAF shareholders may be able to sit back and enjoy (or crystallise value through) the ride.

5 Myths / Unknowns about LICs

  1. “The LIC Sector Underperforms Unit Trust Peers”. Verdict: Impossible to Determine.
  2. “All Investors in a LIC get the Same Performance”. Verdict: False.
  3. “The Sector Trades at a Discount to NTA”. Verdict: False.

These are three of the five misconceptions covered in the latest monthly report from Risk Return Metrics.

Access the full report

Download the full PDF report below to view comprehensive profiles on 90 LICs / LITS, performance tables sector performance ranking analysis and monthly news flow. 

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Rodney Lay
Risk Return Metrics

Investment analyst with particular experience in listed and unlisted investment strategies, equities and structured products.

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