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In pension mode I pay no capital gains and I am planning to increasingly sell off my 25 stocks in my SMSF, worth about $1m, and invest in LICs, like MLT, AFI and Argo, to reduces my stress levels and stabilise my returns. Any comments?
A: I think your strategy makes perfect sense if you want to “reduce your stress” levels and pass over the investment management to the likes of AFIC, Milton or Argo.
The only caveat on this is that most of the major LICs are trading at a premium to their NTA (Net Tangible Assets). I did an earlier calculation on AFIC and it was around 3.0%. Have a look at their website which puts this premium into some perspective.
When these LICs are trading at a premium to their NTA, there is a stronger case for a low cost, broad based index ETF, such as iShares IOZ or SPDR’s STW.
