Listed investment company (LIC) market capitalisation continues to grow year-on-year, according to a new report by Zenith Investment Partners.
The report, Zenith 2016 Listed Investment Company Review, found total market capitalisation for the LIC sector has risen from $27.8 billion to $28.8 billion as at 30 April 2016.
The review noted growing interest in “niche investment strategies”, adding that of the 13 LICs to list since January 2015, only one focused on Australian large caps, and an increasing number of LICs are offering “international exposure”.
Zenith senior investment analyst Dugald Higgins said they still “overwhelmingly” support local equity strategies.
The report added that while the average premium/discount to pre-tax net tangible assets was down on last year, many LICs continue to trade at “significant premiums”.
Commenting on the report, Mr Higgins said investors should keep these premiums in mind.
“LICs provide several potential benefits in relation to robust dividends and franking levels as well as efficiencies from managing a closed pool of assets; however, investors should be wary of not over-paying for the privilege,” he said.
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