Question: If you have a large sum to invest, would it be wise to diversify by investing in a few different LICs? If so, what could you suggest?
Answer (By Paul Rickard): Let me make some important assumptions:
- You want exposure to the Australian sharemarket (not to overseas shares);
- You want broad-based exposure, not small or micro caps per se, nor a manager taking an active (higher risk) position.
With those assumptions, I would consider Milton Corporation (MLT), Argo (ARG) or Australian Foundation (AFI). They are all trading at a bit of a discount to Net Tangible Asset Value (NTA). There is not a lot of difference between the three. Do you need all three? No. Do you need two? Maybe, although they are very diversified. Based on recent performance and discount to NTA, I would probably go for AFI and MLT.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.