Discounted LIC fund opens to all

Affluence Funds Management has opened its LIC fund, which has until now only been open to high net worth sector, to all investors.

The fund is now available to all investors in Australia and New Zealand, allowing more people to invest in a suite of 30 listed investment companies Affluence considers to be discounted.

According to Affluence chief executive Daryl Wilson, a lack of research and fewer institutional investors active in the market ensure LICs trade at large discounts to net tangible assets.

"Most investors concentrate their holdings in a few of the largest LIC's," Wilson said.

"But the real opportunities, the places where we're finding bargains right now, are outside that group."

Wilson said the decision to open the fund to all investors is a result of the "specific opportunity" before the fund, with discounts "at levels not seen for years".

"It's a very unusual situation, where you can access a wide range of very good LIC managers with impressive long term track records, at discounts averaging around 15%," he said.

"We think a range of factors, including an increase in activist investors coming on to LIC registers, will act as a catalyst to close the discount gap.

"We are specifically targeting those LICs where we see the most potential for those discounts to close."

The fund will remain open until it reaches capacity, with Wilson adamant the more money the fund has to manage, the more difficult it can be to execute against the opportunities before it.

"Contrary to what most people think, one of the best advantages a fund manager can have is to be managing less money, not more," Wilson said.

"For this reason, we're carefully managing overall capacity in this fund."

Read more: LICAffluence Funds ManagementDaryl Wilson
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