I'm a big believer in ASX dividend shares because they can provide a mix of good passive income and long-term growth. I recently took part in the L1 Global Long Short Fund Ltd (ASX: GLS) capital raising, and I'm glad I did because of the significant positives I expect in both the short and long term.
One reason I like investing in listed investment companies (LICs) is that they help me gain exposure to areas of the market I don't already cover. I have plenty of exposure to leading ASX growth shares and large international shares, but there are plenty of other opportunities in the global stock market worth buying.
L1 Global Long Short Fund (GLS) offers me a way to get exposure to compelling international stocks without having to search the whole global stock market myself for opportunities.
Let's run through the three reasons why I liked it enough to invest $11,000.
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Effective investment strategy
The ASX dividend share has a compelling investment strategy, in my view.
The investment team in charge of the LIC wants to find businesses with low price-to-earnings (P/E) ratios, very strong earnings growth, and large free cash flow generation.
L1 Global Long Short Fund's portfolio is well diversified across different sectors, countries and company sizes. It also noted that its portfolio has low correlation with the global stock market index and peer fund managers. It's a truly differentiated portfolio.
The LIC is willing to use a mix of long-term investing and short selling to generate returns.
At 30 September 2026, its portfolio metrics for its 'longs' include a P/E ratio of 11.1x, earnings per share (EPS) growth of 14.9% and a free cash flow yield of 6.7%.
In terms of geographic exposure, at the end of September 2026, 40% of the portfolio was invested in North America, 17% in Europe, 39% in Asia-Pacific and 4% in 'other'.
At the end of September, 5% of the portfolio was invested in businesses with a market capitalisation of less than US$1 billion, 42% was invested in companies with a market capitalisation of between US$1 billion and US$10 billion and 53% was invested in stocks with a market cap of more than US$10 billion.
I like smaller global stocks (compared to the giants of industry) because they may be earlier in their growth journeys (with more expansion potential), and their valuations may be more reasonable since they're less followed by analysts. Plus, L1 typically avoids investing in high-flying tech stocks.
Solid returns
Some of the current investments include a global hotel leader, a global aluminium leader, gold miners, an airport infrastructure business, construction materials, copper and European banks.
Ultimately, investing is all about making returns, and the L1 team has proven very effective.
Before I run through some return numbers, remember that past performance is not a guarantee of future returns.
According to its monthly investment update, since the start of the global long short strategy, between 1 January 2025 and 30 September 2026, L1 Global Long Short Fund delivered a total net return of 108.3%, compared to a 35.3% return for the global share market (MSCI World).
According to its monthly investment update, since the start of the LIC (GLS), between 1 December 2025 and 30 September 2026, L1 Global Long Short Fund returned 19.4% net, compared to 12.7% for the global stock market (MSCI World).
L1 Long Short Fund Ltd (ASX: LSF), with the same investment team and philosophy as the GLS strategy (but with a 70% allocation to Australian and New Zealand shares), has delivered a net return of 20.4% per annum over the seven years to 30 September 2026.
Pleasing passive income
The board of directors of L1 Global Long Short Fund have committed to a minimum FY27 dividend per share of "at least" 8 cents. That translates into a grossed-up dividend yield of at least 5.9% at the time of writing, including franking credits.
Pleasingly, because I invested at the capital-raising price of $1.76, I could buy it with a grossed-up dividend yield of at least 6.5%, including franking credits.
The board want to provide investors with "sustainable and growing fully franked dividends". I think it's likely the ASX dividend share will pay a larger dividend than 8 cents per share in FY28.
Overall, I think the ASX dividend share has an exciting outlook.
