Sydney-based WAM Alternative Assets (WMA), managed by Nick Kelly, is working to close the discount at which its listed investment company (LIC) currently trades. WMA is a diversified portfolio of alternative assets, providing investors with exposure to opportunities that aim for resilience and diversification. Wilson Asset Management, which oversees approximately $6 billion in assets, believes WMA will eventually reach Net Tangible Asset (NTA) parity or a premium, similar to seven of its nine other LICs.
The discount largely stems from the broader market’s less familiar understanding of alternative assets compared to traditional listed equities. While retail investors are increasingly aware of diversification benefits, they may not fully appreciate the multi-year timeframe required for new alternative investments to demonstrate strong performance. Kelly noted that the WMA team has diligently reshaped the portfolio, and investments made years ago are now gaining momentum, driving improved performance that is resilient in downturns and uncorrelated to listed equities.
The portfolio’s exposure to private credit, specifically corporate lending, constitutes less than 10 per cent of its alternatives allocation. Kelly acknowledged recent sector scrutiny but highlighted WMA’s stringent criteria for private credit investments: critical workout experience, prudent valuation practices, and transparent disclosure around fees. WMA maintains minimal exposure to real estate, focusing primarily on commercial office, industrial, and life sciences sectors. Water entitlements comprise 12.5 per cent of the portfolio, positioned to benefit from finite supply, ongoing government buybacks, and expected drier conditions from El Nino. Kelly emphasised water as a strong diversifying asset, though acknowledged challenges with a legacy agricultural holding due to sector pressures.
