The total market capitalisation of the listed investment companies (LIC) market has increased to $28.8 billion in April from $27.8 billion a year ago, fuelled by diversity in the market, according to Zenith Investment Partners.
The Zenith’s LIC Sector Review indicated that such a pace of growth capped two years of very strong market rise, which saw market capitalisation being driven up by 38.5 per cent since April, 2013.
Also, diversity in the market continued to expand, with an increase of LICs offering international exposure, however the market was still dominated with Australian LICs, as by market capitalisation.
Senior investment analyst at Zenith, Dugald Higgins, stressed that the sector continued to evolve bringing an increasing number of strategies on offer which “diversified away from the sector’s historical Australian equities/long-only focus”.
“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 premium across the sector,” he warned.
