LIC and LITs sector improves 32%

The listed investment companies and listed investment trusts sector has regained $13 billion in market capitalisation, a year on from the commencement of the market recovery, representing 32% over a year ago.

According to chair of the Listed Investment Companies and Trusts Association (LICAT) and managing director of Whitefield Limited (with market cap. ~$500 million), Angus Gluskie, noted that within the sector Australian equities were up 35.3% and kept pace with the broader All Ordinaries index, which advanced 35.8%.

He said that there was continuing interest from investors in the many benefits that the closed-ended structure of an LIC or LIT offered as, in the case of LICs, these included the ability for profits retained from previous periods to be returned to investors in future periods, providing a consistent and stable income over the medium to long-term.

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“Investors who bought LICs/LITs when they were trading cheaply relative to asset backing in 2020 have been able to generate particularly high returns. Not only have they benefited from the upswing in the market value of shares generally, but they have also received a supplementary return as the LIC/LIT shares themselves returned to a more normal trading level relative to asset backing,” Gluskie said.

“In an economic environment where income and yield are hard to find, these LICs/LITs have continued to generate return and income for their underlying investors.

“The combination of efficiency and stability of the closed-ended structure of both LICs and LITs are attractive to many investors in managing their portfolios.”

LICs and LITs have been assisting investors in growing their wealth for nearly 100 years and, today, over 700,000 Australians invest in the LIC/LIT sector, according to LICAT.

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