LICs

The coverage of LIC/LITs in the report has increased to 70 securities, which now represents approximately 95% of the total market capitalisation of the sector.

LICs that have provided unsatisfactory returns and trading at substantial discounts to NTA have been under scrutiny recently, and in many cases the scrutiny has been more than justified.

Independent Investment Research updates developments in Australia’s listed investment company market and provides comparative data.

The Listed Managed Investment (LMI) Indicative NTA Report tracks the indicative movement of a LMIs pre-tax NTA throughout the month by monitoring the movements in the disclosed holdings and using an index to track the movement of the remainder of the portfolio.

FY2019 will be associated with one word when market participants look back, and that is volatility. Bookended by relatively benign first and last quarters, the second and third quarters of FY19 took both domestic and international asset managers on a proverbial roller coaster ride.

Through April and May we have seen three more listed managed investment vehicles (LMIs) start trading on the ASX including two fixed income-focused listed investment trusts (LITs), Perpetual Credit Income Trust (ASX:PCI) and MCP Wholesale Income Opportunities Trust (ASX:MOT).

The Listed Managed Investment (LMI) Indicative NTA Report tracks the indicative movement of a LMIs pre-tax NTA throughout the month by monitoring the movements in the disclosed holdings and using an index to track the movement of the remainder of the portfolio

Whilst the LMI sector has generally delivered good returns over the past 12 months, there remain a number of uncertainties that could affect global market returns in coming months including the US/ China trade tensions, Brexit and general expectations for lower global growth.

Reporting season has just ended and so we take a look at how the listed investment companies under our coverage fared over that time.

In its latest Quarterly LMI Market Review, Independent Investment Research (IIR) provides detailed coverage of 49 listed investment companies, listed investment trusts and active ETFs including commentary, investment views and ratings.

The reporting season just ended was a good one for the listed investment company sector with most LICs reporting growth in earnings. Of the 31 LICs we cover that paid dividends during the FY2018 period, 26 reported increased earnings whilst only five reported lower earnings.

Reflecting the performance of the small cap index, small cap focused LMIs generated stronger gains than large cap focused LMIs over the 12 months. The average return from our mid-small cap LMI coverage universe for the 12 months to 30 June 2018 was 13.9%.