The LIC sector has enjoyed a healthy increase this past financial year that has been attributed to more and more investors understanding its benefits.
LICAT confirmed on Tuesday that the LIC and LIT sector had seen its market capitalisation rise 32 per cent from last year on the back of two IPO capital raisings in June – ASX:WAR and ASX:SB2 – which amounted to $300 million in new capital.
The sector also jumped up 31.4 per cent excluding IPO capital.
“This was driven by both the increasing value of investment portfolios and the share price of the LICs and LITs themselves,” LICAT chief executive, Ian Irvine, said.
“There is continuing interest from investors who understand the benefits of the LIC and LIT closed-end fund structure, including its cost efficiency, management stability and focus on the long term.”
Mr Irvine added that investors who bought LICs and LITs when they were “trading cheaply relative to asset backing” last year have been able to see higher returns.
“Not only have they benefited from the upswing in the market value of shares generally, but they have also received a supplementary return as the LIC/LIT shares themselves returned to a more normal trading level relative to asset backing,” he said.
“In an economic environment where income and yield are hard to find, these LITs have continued to generate returns and income for their underlying investors.”
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