As part of an update to my SMSF, I will be adding two LICs. When comparing Milton, Argo and AFIC (and reviewing your recent article), I am thinking that I split between Milton and AFIC, who are trading at about a 3% premium at the moment. Argo looks to be trading at an almost 5% premium.
Your article noted that a 2-3% premium should be OK in the longer term (although ideally you should buy at a discount).
I would like to buy some Argo, but 5% seems too much of a premium.
So, my question is (and noting the 3% premium) would a split between Milton and AFIC seem sensible (for a long term strategy)?
A: Thanks for the question.
Based on closing prices on 18 November, NTAs at 31 October, and the movement in the S&P/ASX 200 Accumulation index this month (just over -1.5%), I calculate that:
Argo ($7.85/$7.51): premium of 6.1%
AFIC ($6.11/$5.89): premium of 5.35%
Milton ($4.45/$4.35): premium of 3.8%
I wouldn’t buy Argo, and would question buying AFIC.
I would probably invest in Milton, and split it with an investment in the ETF, probably the SPRD (ASX code STW).