Dugald Higgins
The LIC market reached a total market capitalisation of $28.8 billion as at 30 April 2016, according to Zenith Investment Partners 2016 Listed Investment Company Sector Review. This is up slightly from $27.8 billion the previous year. This capped two years of very strong market growth, which saw market capitalisation grow by 38.5% since April 2013.
Diversity in the market continues to expand, particularly with the increase of LIC’s offering international exposure. However Australian LICs continue to dominate by market capitalisation.
According to Dugald Higgins, a Senior Investment Analyst at Zenith Investment Partners, “There continues to be a range of quality LICs which offer robust returns from skilled managers with the benefit of high franking. The sector has continued to evolve means with an increasing number of strategies on offer which diversify away from the sector’s historical Australian equities/long-only focus.”
Higgins also added, “LICs provide several potential benefits in relation to robust dividends and franking levels as well as efficiencies from managing a closed pool of assets. However investors should be wary of not over-paying for the privilege, with many LICs continuing to trade at strong premiums across the sector.”
Summary of the Zenith 2016 Listed Investment Companies (LIC) Sector Review
From an initial universe of 71 Australian and Global LICs:
- 2 were rated “Highly Recommended”
- “Recommended”
- “Approved”
- 54 were “Not Rated”
