Australian (ASX) Stock Market Forum

ETFs vs LICs

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Ferret said:
I didn't buy any more A200. My total stock holdings are still very skewed to Australian stocks, so I will only be adding to A200 slowly.
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retail ( on-market ) or wholesale ??

i believe the wholesale version pays monthly but double-check that first

sadly my holdings are uncomfortably Australia heavy ( i don't mind ASX listed stocks that do business internationally )

but where is safe and offers real growth

decisions, decisions
 
It may not be realised at the time but investors make the most money in a bear market. No it isn't via jumping in and out or selecting this or that particular share. A good market decline is an opportunity. Give me another tech wreck time, GFC or a re-run of 1987.
 
Belli said:
It may not be realised at the time but investors make the most money in a bear market. No it isn't via jumping in and out or selecting this or that particular share. A good market decline is an opportunity. Give me another tech wreck time, GFC or a re-run of 1987.
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the sliding market in 2011 and March 2020 were both a big help for me

of course having an inheritance to park in 2011 and a sizeable holding in 'BEAR' stocks late 2019/early 2020 made the job easier ( apart from deciding which opportunities to take , that can be hard )
 
The last 6 months have been a tough time for LIC share prices. Many LICs are now trading below their asset values, some by a decent amount.

I've paused my ETF purchases and having a closer look at LICs at the moment.

Added some OPH at 10% below current asset value. Looking closely at adding some WGB. Its NTA figure for 31 October should be out in a week.

I'm also starting to get a little more cautious with international exposure. I'm wondering if the A$ has found a floor and might start reverting to norm.
 
Ferret said:
The last 6 months have been a tough time for LIC share prices. Many LICs are now trading below their asset values, some by a decent amount.

I've paused my ETF purchases and having a closer look at LICs at the moment.

Added some OPH at 10% below current asset value. Looking closely at adding some WGB. Its NTA figure for 31 October should be out in a week.

I'm also starting to get a little more cautious with international exposure. I'm wondering if the A$ has found a floor and might start reverting to norm.
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You could always buy hedged versions of international share ETFs (like Vanguard's VGAD) if you're worried about the A$ rising. Management fees are slightly higher (e.g. 0.21% for VGAD vs 0.18% for VGS).
 
Ferret said:
The last 6 months have been a tough time for LIC share prices. Many LICs are now trading below their asset values, some by a decent amount.

I've paused my ETF purchases and having a closer look at LICs at the moment.

Added some OPH at 10% below current asset value. Looking closely at adding some WGB. Its NTA figure for 31 October should be out in a week.

I'm also starting to get a little more cautious with international exposure. I'm wondering if the A$ has found a floor and might start reverting to norm.
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indeed it has been a while since i last added an ETF ( a new one or to an existing holding )

i have added to existing holdings of PAI , QVE and D2O ( although one might debate whether D2O is a LIC )

i haven't looked at OPH for a while , maybe it is worth another look , WGB doesn't fit me strategy i won't be getting in your way there

the market needs to move lower before i revisit the ETFs

ditto on the international exposure when i do i strongly prefer Asia/India
 
GlobeTrekker said:
You could always buy hedged versions of international share ETFs (like Vanguard's VGAD) if you're worried about the A$ rising. Management fees are slightly higher (e.g. 0.21% for VGAD vs 0.18% for VGS).
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True.

I've thought about hedged international ETFs in the past. I intend holding VGS long term and my feeling is that currency fluctuations will even out over time and that I may as well not pay the additional fees for VGAD.

That said, I am cautious about buying VGS at the low point of currency movements.
 
Ferret said:
I've just come back from a holiday in India.

That country has a lot of issues. Many more than China (where I lived for quite a few years).

I think you will have to be very patient to ever get good returns from investing in India.
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issues , indeed ,

but bottle-necks there is some chance that will be fixed , unlike the blatant denial in some developed nations

well China is mature now and will have it's own issues , Japan is shrinking, aging and buried in debt , Indonesia has growth potential but is also a large group of islands some won't benefit so much from a better rail transport

Vietnam might be better in the short/mid term but lacks the population to tackle India and China

unless India brings in a population reduction policy ( like China did ) India in the long term looks a solid bet

besides many rival nations are in the process of collapsing ( and not just G7 nations )
 
Ferret said:
I've paused my ETF purchases and having a closer look at LICs at the moment.
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Since mid-October I have added to the LICs I hold but yesterday added to the VAS holdings only due to this:

1699916730612.png


A very unscientific re-balancing arrangement. :)
 
Quite a few LICs currently trading a discount to NAV. I can't see a reason to add to an ASX tracking ETF at this time with discounts on offer from LICs.

I saw on another thread that @Belli recently topped up ARG at a 6% discount.

I've recently added DJW. I'm not after the higher yield that DJW is meant to provide, but the 11% discount is very appealing.

Another that is looking attractive is OPH. It's a managed fund, rather than a LIC, and has a fairly hefty management fee, but gives access to some smaller companies and has been trading with a discount in the teens for some time.
 
Ferret said:
Quite a few LICs currently trading a discount to NAV. I can't see a reason to add to an ASX tracking ETF at this time with discounts on offer from LICs.

I saw on another thread that @Belli recently topped up ARG at a 6% discount.

I've recently added DJW. I'm not after the higher yield that DJW is meant to provide, but the 11% discount is very appealing.

Another that is looking attractive is OPH. It's a managed fund, rather than a LIC, and has a fairly hefty management fee, but gives access to some smaller companies and has been trading with a discount in the teens for some time.
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When the market is going up, LICs are not generally liked and can trade at a discount to NTA. When the market is going down the opposite can apply. Value v Growth orientation thang [sic], especially when a "smoother" dividend income is involved.

Doesn't apply to all LICs though as I notice there is still love for WAM despite it reducing its gross dividend with 60% franking.
 
Ferret said:
I've recently added DJW. I'm not after the higher yield that DJW is meant to provide, but the 11% discount is very appealing.
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Curiosity got the better of me. I haven't looked at DJW for a very long time.

I notice from the face page its website it has dropped any reference to capital growth and its focus is on income only. Due to its approach of writing options it appears to get hammered on occasion. Still, with over $900m of FUM its holdings do have value. MER at 0.45% which approximately the same as MIR but that is smaller at $600m FUM and targets a different sector.

Not a good look for DJW from the basic chart in my view but it doesn't take account of dividends. Truth be told I'm too lazy to do any such numbers.

1710230035741.png


Not my place to say whether or not people should place money in it as that is their decision. However, investors would be wise to decide what they expect out of it.
 
Interesting graph @Belli. It gives me some pause for thought.

Perhaps I put too much store in the NAV discount. I'll keep a close watch on how this one performs.

Their Shareholder Briefing presentation was out today, covering DJW, MIR and AMH. DJW is still claiming it will achieve capital growth.
1710311202987.png


The net asset backing slide was interesting. The DJW and AMH's discount is the biggest it has been in the last 4 years. I'd expect that it will come back a bit at some point.
1710311359089.png

DJW's top twenty holdings aren't particularly exciting but look solid.
1710311650405.png

I quite like the look of AMH's holdings too and it's large NAV discount. It's not a very liquid stock though, and this has put me off it in the past.
1710311863312.png

MIR has had a great track record over many years, but I've never got around to buying it, thinking it was expensive. I need to fix that.
1710312145287.png
 
now my main ( personal ) concern for DJW is it focuses on the top 200 stocks which i have 'cherry-picked ' between 2011 and 2021

so given it gives me no extra strategy advantage ( and some duplication risk ) it remains uncompelling ( to me )

however for a newer investor DJW v a top 200 index fund will prove an interesting dilemma , DJW increases returns by using options , while some ETFs improve returns by lending out the portfolio shares that could be a more difficult choice than it seems at first glance

a LIC trading persistently below NTA may become a take-over target , giving an unexpected capital gain

AMH would fill my aims better ( than DJW ) but so far have resisted buying into them

active managers come at an extra fee expense , so investors need to find the LICs that generate those extra returns to cover the extra costs ( and some of them do that very nicely )
 
Belli said:
When the market is going up, LICs are not generally liked and can trade at a discount to NTA. When the market is going down the opposite can apply. Value v Growth orientation thang [sic], especially when a "smoother" dividend income is involved.
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my unofficial and very subjective sentiment monitor has had small cap LIC MIR holding it's own to the NTA, while large cap focused AFI has been losing ground.
 
If you wish to look at some other LICs at a discount to their NTA, then

AUI 15.7% discount to pre-tax NTA
DUI at 18.9% discount
CIN at 35.4% discount

The following is a link to the Bell Potter reports on LICs at Firstlinks.

www.firstlinks.com.au

LIC reports and updates

Various reports and updates on Listed Investment Companies (LICs) and Listed Managed Investments (LMIs) as provided by Bell Potter, Independent Investment Research, and Morningstar.
www.firstlinks.com.au www.firstlinks.com.au

I haven't bothered with these reports for some years but others may find them useful
 
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