How practical is value averaging in a LIC?

[sachintha]

Hi,
I'm thinking of getting my hands dirty by starting off with dollar cost averaging (DCA) in a LIC.
I've also read about the idea of dollar value averaging (DVA) which seems to suggest that under certain circumstances outperforms DCA.

My concern is how practical is DVA in Australia when broker fees are taken into consideration? Since DVA might require selling or buying relatively few shares to maintain the growth and thus the
broker fees might take up a significant proportion.

Of course I understand that DCA also suffers from this but at least lengthening the time gap between the investments and increasing the periodic investment amount can reduce this effect to some extent.

 

[ParleVouFrancois]

Short answer: probably a waste of time, especially if you're worried about brokerage taking away a significant portion of your investment.

 

[So_Cynical]

Lots of LIC's have a DRP (Dividend Reinvestment Plan) perhaps that's the go coupled with a few timely entry's to keep the brokerage low on a PA basis.

 

[sachintha]

Thanks guys.

 

[sydboy007]

Keep an eye on the NAV

Am kicking myself for not buying AIF or ARG this time last year as they were trading at a 10% discount to NAV. Now they're very close to NAV, ARG sometimes is slightly above

 

[So_Cynical]

On the subject of LIC's and NTA.

The ASX puts out monthly reports on this...but i don't actually know how to find them at the ASX site other than general search.

http://www.asx.com.au/documents/products/LIC_NTA_Report_November_2012.pdf

Edit: found it http://www.asx.com.au/products/market-update-managed-funds.htm

 

[kid hustlr]

Good link cynical.

I think those who are in the buy and hold game would do very well looking at information like this.

Edit: had a quick look over the links. A lot of the discounts have come in 5,6,7%. That on top of a strong year of returns would have been a pretty strong 12 month return!

I remember thinking a while back that I should use a few of the LIC discount/premium's to NTA as a 'risk indicator'. I feel like they would provide some pretty strong signals at both extremes as well as provide an idea of the general trend. Spreads coming in suggests risk on which suggest an upward moving market etc etc.

One day I'll explore this.

 

[kid hustlr]

Someone will also have to explain to me how some LIC's can trade at such massive discounts (BEL, OEQ, MEF + others)

 

[ccc]

Someone will also have to explain to me how some LIC's can trade at such massive discounts (BEL, OEQ, MEF + others)

poorly performing LIC's tend to trade at discounts to NTA.
also if the market doesn't rate the investment manager highly.
also if the market cap is very low, so lower liquidity, the market is less interested.