Leading investment research house, Independent Investment Research (“IIR”), has today released its latest quarterly update on the Listed Investment Company (LIC) sector. The report outlines that at 30 June 2016, there were 90 LICs and Listed Investment Trusts (LITs) on the ASX, with a collective market capitalisation of $29.5B. The number of LICs and LITs continues to grow, increasing by 11 over the 12 months to 30 June 2016, and experiencing a collective market cap increase of 3.7% for the period.
The broader Australian market performed well during the June quarter, with the ASX All Ordinaries Accumulation Index up 4%. However, for the 12 months to 30 June 2016 the index was up just 2.0%. Small caps continued to outperform large caps, with the S&P/ASX Small Ordinaries Accumulation Index rising 5.8% over the quarter and 14.4% for the 12 months to June 2016.
This disparity in the overall market performance was reflected in the performance of LICs, with the Australian large cap share focused LIC portfolios (pre-tax NTA plus dividends) returning an average of 0.5% for the 12 months while the mid/small cap focused LIC portfolio returns averaged 9.0%.
The best performing portfolio (pre-tax NTA plus dividends) over the June quarter was 8EC with a 12.6% increase in portfolio value due to strong returns from two of its junior resource investments. With a positive market performance most LICs posted positive returns during the quarter.
From a shareholder perspective BTI was the best performer for the quarter, with the share price (including dividends) increasing 12.9%. BTI was also the best performer over the 6 months to June 2016 with the share price (including dividends) rising 24.7%.
Commenting on the research, IIR Analyst, Peter Rae, said: “We continue to see steady growth in the LIC sector with a strong pipeline of companies planning a listing, and the quarter has seen most LICs post positive returns.”
“Given market conditions over the previous 12 months, we have seen those LICs focussed on the small cap end of the market substantially outperforming their large cap focussed counterparts.”
