Listed Investment Companies (LICs) are entities listed on the ASX which invest capital in a portfolio of assets, often in other listed companies. Increasing demand from retail investors for LICs has driven growth in the sector, and there are now many alternatives to choose from.
Of late, there has been a strong increase in the number of LICs with a global investment mandate that provide investors access to markets they may normally find difficult to participate in.
Investors can also choose LICs which focus on microcap stocks to large cap, value or growth investing, or even “ethical” assets.
Below, I’ve highlighted three top LICs, each with different investment mandates, that I believe will continue to reward investors over the long-term.
WAM MICRO FPO (ASX: WMI) is the latest LIC offering from Wilson Asset Management. As the name suggests, WAM Microcap has a microcap focus – investing in undervalued growth companies with a market capitalisation of less than $300 million.
Since inception in June 2017, WAM Microcap has returned 23.1% to 30 November, before expenses fees and taxes. That performance is 8.1% higher than the benchmark ALL ORDINARIES (Index: ^AXJO) (ASX: XAO) index and has driven the LIC’s share price up 24% since listing.
Although I usually recommend investors chose LICs with a strong track record, Wilson Asset Management has a long history of outperformance through its mid and small-cap LICs and I expect this will extend to microcap investing.
MFF Capital Investments Ltd (ASX: MFF) was previously managed by Magellan Financial Group Ltd (ASX: MFG) and continues to be run by one of Magellan’s co-founders and MFF’s largest shareholders; Mr. Chris Mackay.
MFF’s strategy is to invest in international and Australian-listed companies, with a current focus on large US stocks like Visa, Mastercard and Bank of America.
Over the last five years, MFF’s Net Tangible Asset (NTA) plus dividends has increased an average 21.8% per annum. Such strong performance has driven MFF’s share price 140% higher during the same timeframe, and insider Chris Mackay has been adding to his already substantial holdings in 2017.
After a disappointing 2016, shares in international LIC Platinum Capital Limited (ASX: PMC) have increased 27% so far in 2017. The portfolio is managed by founder and high-profile investor Mr. Kerr Neilson, returning an average 12.8% per annum since inception in 1994.
In addition to significant US investments, the LIC has holdings in listed companies in Asia and Europe. Included in Platinum’s top ten positions are Samsung Electronics, Alphabet Inc and Tencent Holdings.
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Motley Fool contributor Ian Crane owns shares in MFF Capital Investments Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.