ETFs and LICs -Either, Neither or Both? · ETFs and LICs -Either, Neither or Both? Chris Stott,...
Transcript of ETFs and LICs -Either, Neither or Both? · ETFs and LICs -Either, Neither or Both? Chris Stott,...
©2016 Morningstar, Inc. All rights reserved.
ETFs and LICs - Either, Neither or Both?
Chris Stott, Chief Investment Officer and Portfolio Manager, Wilson Asset Management
Robin Bowerman, Head of Market Strategy and Communications, Vanguard
Moderator: Alex Prineas, Senior Research Analyst, Morningstar
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Total assets under management (TAUM)
Data as of 31/12/2015
Source: Morningstar Direct, Morningstar Australian Asset Flows report
ETFs and LICs still a small slice of the industry
Australia’s fund industry is growing…
Australia - Total Assets Under Management - A$1.35 trillion
Data as of 31/12/2015. Source: Morningstar Direct & Morningstar Australian Asset Flows report
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Total Industry Assets (AUD billions)
…but much of the growth is driven by rising stock markets, not flows
Australia - Total Assets Under Management - A$1.35 trillion
Data as of 31/12/2015. Source: Morningstar Direct & Morningstar Australian Asset Flows report
S&P/ASX 200 Index
returns
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Total Industry Assets (AUD billions)
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Australian ETPs - Products and funds under management
Data as of 31/12/2015, Source: Morningstar Direct
Australia’s ETF market is growing rapidly, measured by assets and products
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Australian LICs - launches since 2013
Data as of 13/05/2016, Source: Morningstar Direct
Australian listed investment companies (LICs) are also growing in number and assets
LIC Ticker Net Assets Inception Date
WAM Leaders WLE Not yet listed May 2016 ?
Platinum Asia Investments Ltd Shs PAI 265,852,519 21/09/2015
Future Generation Glb Investment Co. Ltd FGG 283,639,979 10/09/2015
Argo Global Listed Infra Limited ALI 286,181,276 3/07/2015
Wealth Defender Equities Limted WDE 110,646,106 21/05/2015
Perpetual Equity Investment Company Ltd PIC 251,638,048 18/12/2014
Future Generation Inv.Co. Ltd FGX 255,268,737 8/09/2014
QV Equities Limited QVE 240,184,773 22/08/2014
Global Value Fund Limited GVF 113,601,404 21/07/2014
Blue Sky Alternatives Access Fund BAF 126,146,714 16/06/2014
PM Capital Asian Opportunities Fund Ltd PAF 58,979,355 21/05/2014
PM CAPITAL Global Opps Fund Limited PGF 340,974,212 12/12/2013
Australian Masters Yield Fund No 4 AYK 54,176,742 31/10/2013
Australian Masters Yield Fund No 3 AYJ 98,644,277 31/10/2013
Watermark Market Neutral Fund Limited WMK 92,867,020 18/07/2013
US Select Private Opportunities Fund II USG 115,899,084 9/04/2013
NAOS Emerging Opportunities Company Ltd NCC 46,449,114 26/02/2013
Assets in LICs launched since 2013 2,741,149,360
Total LIC assets 27,492,156,047
gA stream of fully franked dividends – meaning enhanced after-tax returns to shareholders
gClosed pool of capital – allowing fund managers to focus on investment fundamentals
g Strong corporate governance – protecting shareholders welfare
gActive management – enhancing returns to shareholders and aligning fund managers’ and shareholders’ interests
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Source: Wilson Asset Management
The listed investment company (LIC) structure can provide:
gOutperformance
g Paying fully franked dividends
g Engaging with shareholders
g Treating shareholders with respect
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Source: Wilson Asset Management
What makes a good LIC?
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Share price relative to NAV
Data as at Jan 2016, Source: Bloomberg, Vanguard Investments.
ETF premium/discount to NAV – comparing ETFs to LICs
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Share price relative to NAV
Source: ASX Monthly Report 30/04/2016, Vanguard Investments.
ETF premium/discount to NAV – comparing ETFs to LICs
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The five lowest cost Australian equity ETFs and LICs
Data as of 31/03/2016, Source: Morningstar Direct
At the cheapest end of the scale, ETF and LIC fees are similar
ETFs Morningstar Ticker Net Assets Inception Date Management Fee
iShares Core S&P/ASX 200 (AU) IOZ 405,623,200 6/12/2010 0.15
Vanguard Australian Shares ETF VAS 1,457,154,314 4/05/2009 0.15
UBS IQ MSCI Australia Ethical ETF UBA 130,774,674 18/02/2015 0.17
SPDR® S&P/ASX 200 ETF STW 2,902,227,994 24/08/2001 0.19
Vanguard MSCI Australian Large Coms ETF VLC 57,890,410 23/05/2011 0.20
LICs Morningstar Ticker Net Assets Inception Date Management Fee
Milton Corporation Ord MLT 2,710,178,647 30/01/1962 0.12
Carlton Ord CIN 953,882,540 28/02/1971 0.13
Argo Ord ARG 4,669,225,542 1/01/1947 0.15
Australian Foundation Investment Company Ord AFI 6,035,852,409 1/01/1936 0.16
BKI Investment Company Ord BKI 876,147,831 12/12/2003 0.18
Important Information
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