Investors need to squeeze every ounce of return from their portfolio with the Australian share market near its record high and interest rates at record lows. One opportunity is out-of-favour Listed Investment Companies (LICs) that invest in small- and mid-cap stocks.
I cannot recall seeing as many LICs trading at such large discounts to their pre-tax Net Tangible Assets (NTA). Even LIC leaders such as Australian Investment Foundation Company (AFIC), Argo Investments and Milton Corporation are trading at decent discounts to NTA.
LICs have lagged the share market recovery this year. Theories for that underperformance include: investor “fatigue” from an increase in LIC floats in the past few years; the poor performance of several LIC floats; rapid growth in Exchange Traded Funds and index investing; the shift away from active fund managers; and waning sentiment towards the LIC sector.