This could be the best LIC to buy on the ASX

The best LIC to buy on the ASX could be MFF Capital Investments Ltd (ASX: MFF).

A LIC is a listed investment company which aims to invest shareholder money into other businesses it thinks will generate good returns.

Unlike most LICs, MFF Capital looks to invest in international shares because the 98% of the global shares not listed on the ASX is likely a good hunting ground.

The Portfolio Manager and Managing Director of MFF Capital is Chris Mackay, the co-founder of Magellan Financial Group Ltd (ASX: MFG). Mr Mackay and his family are heavily invested alongside shareholders, combined they own nearly 62.9 million shares, which equates to over $171 million.

MFF Capital has been one of the best-performing LICs over the past five years, according to Baillieu Research it has generated an average total shareholder return of 15.7% per annum in that time. Its net tangible asset (NTA) performance has been even better, returning an average of 18.4% per annum.

It has been able to produce such a strong performance by investing in high-quality global shares like Visa, MasterCard, Home Depot, Bank of America, Alphabet (Google), JP Morgan Chase, Lowe’s, Facebook and HCA Healthcare.

MFF Capital’s portfolio is heavily invested, it doesn’t carry large amounts of cash unlike some other managers. Indeed, at the end of November 2018 it had 0% net cash with a little bit of Australian cash and a little bit of foreign currency debt.

MFF Capital believes that despite the recent volatility its portfolio of companies continue to reflect advantaged business positions with decent opportunities for profitable growth. The investment team at MFF Capital believes its holdings’ values are satisfactory, its only real action in recent times has been to sell down some of its consumer shares that it bought earlier in the year instead of holding cash.

Foolish takeaway

I think MFF Capital is one of the best LICs on the ASX and is worth buying considering, it’s likely trading at a small discount to its pre-tax NTA. It has recently committed to slowly increasing the dividend, which is a good way to reward shareholders along with the capital growth.

However, I can understand if some investors want to wait to buy shares of MFF Capital when the US share market is down.

5 Companies we like better than MFF Capital

When ace stock picker Scott Phillips has a buy recommendation, history suggests it can pay to listen.

Scott recently revealed what he believes are the five best ASX stocks for investors to buy right now… and MFF Capital wasn’t one of them! That’s right — he thinks these 5 stocks are even better buys.

See the 5 stocks

Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund 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 Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.