Professional Planner|Zenith Fund Awards 2015 – listed investment companies (LICs)

Winner: Wilson Asset Management

Zenith says: For more than 15 years, Wilson Asset Management (WAM) has been a stalwart of the LIC industry. WAM offers a suite of quality LICs with a strong absolute return approach, spread across the full spectrum of sector and market-capitalisation ranges. WAM is also strongly regarded by Zenith in terms of shareholder engagement. This is a critical facet of operating LICs, particularly given that in difficult markets, shareholder dissatisfaction can force shares to trade at heavy discounts to portfolio values, despite investment strategies remaining sound.
– Dugald Higgins, senior investment analyst

Zenith sector review: LICs have enjoyed a period of renewed interest over the past three years. Given the large number of capital raisings and initial pubic offerings (IPOs) that have taken place, the universe of strategies has deepened considerably. Zenith believes the LIC structure has the potential to produce benefits that enhance overall returns – specifically, increased franking and negating the impacts of capital flows on performance. Many of the older, larger LICs, while not as active in their portfolios, can be bought at a very competitive price, effectively offering active strategies at close to (or even below), index prices.

Chris Stott, chief investment officer, Wilson Asset Management (pictured): We’ve seen increased interest from SMSFs in the listed investment company space – that hunt for the fully-franked dividend yield. So we think with our products’ positioning in that small [to] mid-cap end of the market, that investors have favoured our products with our long track record of performance; consistent fully-franked dividends that we’ve been able to pay to investors over time. We think that’s been a big driver of the SMSF space. We’ve got a very strong culture, 16 employees, which has doubled in the last four years. We’ve got a very tight-knit team and we have a lot of out-of-office activities where we try and bond as a team – it’s like a little family, if you like. We think we’re in the mature stages of this bull market. We’re now over six years in post-GFC, 2009, that so that could present a challenge in that equity market valuations are elevated at the moment. From an opportunity sense, we believe [the] SMSF [sector] is in its infancy, and we think the next 10 years will be a golden decade for them.

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