An unusual event occurred in thin post-Christmas trading on the ASX. Australia’s major listed investment companies (LICs), including the giant Australian Foundation Investment Company (AFI), blew out to a premium to their NTA (net tangible asset value). And despite the market rallying 5.7% already in January, AFI is currently trading at a premium and is in sell territory. For investors seeking an easy way to gain broad based exposure to the Australian stock market, there is better value to be had with index hugging exchange traded funds.
I will come back to why AFI is a sell, but firstly, a quick re-cap on the broad based listed investment companies and their competitors, the major exchange traded funds.
Exchange Traded Funds (ETFs)