Last week, Independent Investment Research released the most recent edition of its listed managed investments (LMI) market review, which provided detailed coverage of 59 listed investment companies (LICs) on the ASX.
Here are 4 ASX LICs that analysts rated as ‘highly recommended’ in the market review.
Australian Foundation Investment Company (ASX: AFI)
The Australian Foundation Investment (AFI) Company adopts a conservative investment approach that focuses on providing investors with a stable capital growth and dividend stream. AFI uses fundamental analysis to identify stocks listed on the ASX with a heavy focus on large cap companies. The company ensures a diverse portfolio by choosing high-quality assets, brands and businesses that can withstand the business cycle and have sound financial metrics.
The AFI portfolio has a strong weighting in financials as a key source of fully franked dividends. Analysts like AFI on the back of the company’s transparency and ability to deliver a stable and growing fully franked dividend.
WAM Research Limited (ASX: WAX)
WAM Research invests in small-to-medium growth companies that are considered to be undervalued. The company uses a research-driven approach to identify investment opportunities with low earnings multiples, earnings growth potential, free cash flow and advantageous industry position.
Analysts find WAX suitable for investors looking for well-managed exposure to Australian small- and medium-cap stocks. The portfolio has a long-term track record of generating returns and lower levels of volatility.
Milton Corporation Ltd (ASX: MLT)
The Milton Corporation portfolio provides investors with a growing, fully franked income stream. The company focuses on a long-term timeframe and is heavily weighted towards large cap stocks on the ASX.
Milton uses in-house and external research to devise investment opportunities that are approved by an investment committee. Analysts cite that Milton is highly recommended on the company’s multi-decade, proven investment process and highly experienced investment team.
Mirrabooka Investments Limited (ASX: MIR)
Mirrabooka Investments is a company that focuses on small-to-medium companies listed on the ASX. The company focuses on finding stocks with strong growth prospects that have low price-to-earning ratios and high dividend yields. The Mirrabooka portfolio is heavily exposed to industrials and the information technology sector.
Analysts have given Mirrabooka the highest rating out of the reviewed LICs, due to the company’s strong investment team, transparency and impressive track record. Despite focusing on small- and medium-cap stocks, the greater levels of risk exposure can also result in substantial returns.
Should you buy?
Listed investment companies can be an excellent option for investors looking to expose their portfolio to different investment strategies, sectors and asset classes. Before buying shares in any of the LICs mentioned, it is important for investors to conduct further research to ensure it complies with their risk and investment strategies.
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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. 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.
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