FY24 LIC & LIT Review

With the FY24 results season all wrapped up in the attached report we take a look at the key news flow for the September as well as provide a review of results for LICs and LITs for the FY24 period. For each of the categories we take a look at the NTA/NAV and share/unit price performance as well as the dividend/distributions declared. Note the NTA data used to calculate returns is after tax on realised tax on realised gains but before tax on unrealised gains.

From a dividend/distribution perspective, investors fared well, with more than 50% of LICs and LITs increasing the ordinary dividend/distribution for the FY24 period and 72% of vehicles either maintaining or increasing their ordinary dividend/distribution on the prior year. Further to this, by and large LICs had a healthy level of dividend coverage providing the ability for many LICs to maintain the dividend in the event of a period of market weakness.  

The number of LICs and LITs declined in the FY24 period, through consolidation and the restructure of some vehicles as investors became impatient with underperforming vehicles. As at 30 June 2024, there were 87 LICs and LITs on the ASX, down from 90 as at 30 June 2023. While the number of LICs and LITs was down, the total market cap actually increased over the period.  

The key news items for September include:

1) Clime Capital Limited Announces SPP

The purpose of the SPP is to grow the Company’s assets to gain additional access to market opportunities. The Company’s increased size is expected to reduce the fixed expense ratio of the Company. The proceeds raised from the SPP will be invested in accordance with the Company’s investment strategy. 

2) Regal Makes a Play for Platinum

Based on the share price of Regal prior to the announcement, the proposal had an implied value of $1.10 per Platinum share, which was a premium to the Platinum share price prior to the announcement.

Platinum’s share price has been in a steady state of decline over the last 10 years with the share price decline accelerating since June 2021 as the continued relative underperformance of the strategies saw a continuous outflow in FUM. This dynamic has been a contributor to the persistent discounts at which the LICs managed by Platinum have traded (PMC and PAI). The two companies have recently announced their intention to convert the shares of the two LICs into units of the relevant ETMFs currently trading on the ASX to allow shareholders to redeem their investment at NAV.

3) Pengana Global Private Credit Trust Raises Capital

The trust issued 5.9 million new units at $2.0227 per unit under the placement which was around the NAV of the trust as at 31 August 2024.

4) Ben Skilbeck Stands Down from PGF Board

Ben has been a director of PGF since 2015 and was the CEO of the Investment Manager until June 2024. The resignation comes after the appointment of Michael Ryan as an independent, non-executive director in August 2024. Michael is a highly accomplished director and executive with extensive experience in domestic and international capital markets. Before moving into board and board advisory roles. 

5) Reminder of SEC Conditional Proposal

A combination of an improved dividend and the Conditional Proposal has seen the discount to NTA narrow materially since the announcement in January. The prospect of the conversion to an unlisted unit trust is expected to provide support for the share price, however in the event the discount widens and the share price trades at an average discount of greater than 5% there will be an arbitrage opportunity for investors.  

6) Loomis Sayles Global Equity Fund Changes the Team & Reduces Fees

Effective 14 October 2024, the Fund will be managed by the Loomis Sayles Growth Equities Strategies team, led by Founder, CIO and Portfolio Manager, Aziz Hamzaogullari. While the Fund will continue to have a long only global equities mandate and the investment objective will remain unchanged, as a result of the changes to the investment team responsible for managing the portfolio there will also be a change in the investment philosophy and style.

The Fund will invest in securities that it believes have high-quality characteristics and durable growth with attractive valuations. The Fund will source opportunities through its global value chain analysis, which helps the investment team understand how an industry creates value and identify companies that capture that value. The Fund will continue to focus on large cap companies, however can invest in companies with a market cap of US$500 million+.