Leading investment research house, Independent Investment Research (“IIR”), has today released their Listed Managed Investments update for the September 2016 quarter. During the quarter, the S&P/ASX 200 Accumulation Index was up 5.1%, this constitutes 13.2% growth for the 12 months to September 2016. The Small Ordinaries Accumulation index rallied 8.5% and 29.2% for the 12 months, possibly supported by the recent rally in resources with the S&P/ASX 200 Resources Accumulation Index up 14.2% for the quarter and a further 22.6% for the 12 months.
Market performance during the quarter was again reflected in Listed Investment Companies (LICs), with the Australian large cap share focused LIC portfolios (pre-tax NTA plus dividends) returning an average of 10.00% for the 12 months while mid/small cap focused LIC portfolios significantly outperformed, returning on average 18.3%.
Throughout the quarter, we have witnesses a number of large cap focused LICs increase their weightings towards selected small cap stocks. This reweighting is possibly due to the weak growth outlook and pressure on dividends from many large companies, particularly in the banking, resources and energy sectors. However, it is unlikely a slight increase in higher growth, small cap stocks will significantly shift the performance dial for these portfolios over the next quarter.
Returns from internationally focused LICs/LITs were mixed for the September quarter, with the LICs hosting a blended portfolio of local and international shares delivering strong returns, and LICs with a strict international focus also mixed with more delivering negative returns than positive.
IIR analyst Peter Rae, said: “The September quarter has proved promising for LICs and Listed Investment Trusts. We have witnessed strong growth in Australian small cap shares, which has inevitably led to the top five performing LICs within our coverage being all mid/small cap focused. However, this shouldn’t discount a stable, average 10.00% return from large cap focused portfolios.
“There have also been numerous market highlights throughout the quarter, namely the successful listing of Contango Asset Management, following a public offer and backdoor listing and Antipodes Global LIC raising $313m in equity via an IPO. Both of these events, amongst others, provide us with a positive outlook over the remainder of the calendar year.”
