Investors should expect to see be further rationalisation in the listed investment company and trust sector, according to Wilson Asset Management, as it seeks strategic opportunities for its Strategic Value trust.
The trust (WAR) was listed in June and sought to take advantage of market mispricing opportunities including securities trading at discounts to assets or net tangible assets with the main focus being on listed investment companies.
LICs in the fund included Templeton Global Growth, Magellan High Conviction Trust, Pengana International Equities and Naos Small Cap Opportunities.
Speaking on an update on the trust, manager Geoff Wilson, said the trust was holding more than 20% in cash as it sought its next opportunities.
“We are happy with our portfolio. We are holding about a high 20% of the portfolio currently in cash as we look for some very specific strategic opportunities. I do think there will be further rationalisation in that sector over the next 12 months. We will be involved in that.
“One that we have been buying recently is VGI Partners Global Investments. We were buying it the other day at 16% discount to its net tangible assets. You are getting exposure to that fund manager and the professional investors are paying a dollar, and we are paying 84 cents which to me is exceptional value.”
Asked whether there were too many LICs, he disagreed and said the sector would continue to grow in the future.
“There are definitely not too many listed investment companies. The number of listed investment companies has probably doubled in the last four or five years. They will continue to grow. It is a great sector. There is a lot of demand for these types of products because there is transparency,” Wilson said.
“You have a board of directors that are accountable, the investment manager is accountable, and that is what has resulted in some of the changes in structures more recently. For investors, you are getting exposure to a growing stream of fully franked dividends and 60% to 65% of our investors are self-managed super investors. It is a very attractive investment vehicle.”
