Don’t discount LICs yet: Premium
Listed investment companies (LICs) have a strong future going forward, with changes to the Corporations Act favouring investors, Premium Investors chairman Tom Collins has claimed.
The firm announced strong results this week, reporting a net profit after tax of $18.1 million for the year ending 30 June and a final dividend of 3.5 cents per share, taking the full year dividend to 8.5 cents. This represented a cash yield of 12.2 per cent of current share price. Last year, the firm saw a loss of $39.4 million.
Collins said the removal of the prohibition from the Corporations Act on a company paying dividends to shareholders while retained earnings were negative and the company reported a loss in financial period have ensured LICs are now in a stronger position to satisfy shareholders. Collins added that the banning of trail commissions as stipulated in the Ripoll Review would also enhance the appeal of LICs, making them easily accessible liquid investments.
Premium was the second best performing LIC in research carried out by research house Independent Investment Research (IIR). Findings released by the firm showed a portfolio decline of 4.7 per cent, taking the 12-month portfolio return to 16.3 per cent.
The report showed that the majority of listed investment companies were trading at a discount to pre-tax NTA at the June quarter end. However, it added that as a group, the discounts to pre-tax NTA for LICs tightened, with only four of the 12 LICs covered experiencing a widening in the discount.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
