LICs & ETFs that can’t beat the index: Any point?

Returning to the other assertion expressed somewhere (this thread or elsewhere), that returns are paltry. Here are some numbers, for both Aust focused and International LICs. By way of explanation, the Internal Rates of Return include Franking Credits, and that is fine, as these are from my SMSF.

I used to hold a few LICs in my own name, set up a Super Fund in 2006 and started transferring in straight away (OMTs) because it was a much more generous regime then and my personal CGT liabilities could be managed. Returns (pa), incl Franking, are below:

LIC : … 12 mths … 5 yrs …. 10 yrs…. Since inception (incl GFC)
AFI : ….. 27.2% ….. 9.5% ….. 9.2% …. 8.4%pa
ARG : ….. 23.4% ….. 9.3% ….. 9.3% …. 7.9%pa
MLT : ….. 20.6% ….. 8.6% ….. 9.7% ….. 9.5%pa
MIR : ….. 12.8% ….. 11.9% …. 12.1% …. 10.9%pa

Used to hold DJW but sold, used to hold WAM but sold. I also own SOL which is an Investment House, has higher management costs, is less diverse; I have been trimming my exposure as I think core assets are problematic (TPG, NHC)
SOL : ….. -9.5% …… 18.3% five yrs …… 11.88%pa since inception (held less than 10 years).

As mentioned in previous post, these are my returns. I have been working and salary sacrificing, hence could transact (usually Buy in SPP/ Rights Issues or when below NTA) but occasionally Selling a few. In each of these holdings, I have between $120-200K invested.

What does it tell me about Australian domestically focused LICs? If markets revert to the mean ( I think they do) then the last year has been atypical. Also, over the years, its true, for Australian equities you get about 4% growth a little less in dividends and 1 + a bit % in franking.

About four years ago I stopped adding to Aussie equities and thought about diversification. Has this been sensible? Probably. With interest rates dropping and the AUD in a general decline, it went into Bonds and International, plus played with shorter trades. And recently, added Gold. The barbell.

Given International LICs are newer, raised less money, have been getting bad press, usually carry a higher MER, are mostly trading under NTA, the returns are instructive. I missed Magellan MFF, even though aware of it since 2007, but own Platinum since then

LIC : … 12 mths …3 yrs …… 10 yrs ……… since inception
PMC : … 2.6% ……. 9.1% …… 9.8% …….. 9.7%pa
ALI : …. 36.3% ….. 16.3% ….. (….) …….. 9.7%pa
FGG: …. -1.9% …… 4.5% …… (….) ……… 3.6%pa
API : …. 12.1% …… 5.2% ….. (….) …….. 4.5%pa
GVF : …. 14.2% …… 6.3% ….. (….) ……… 9.1%pa
PAI : ….. 5.9% ……. 13.2% ….. (….) …….. 6.8%pa
PE1 : …… (….) ………………………………….32.1%
What does this tell me about domestically listed but Internationally focused LICs? The markets are much deeper, lots more investment styles on offer, and returns are more varied. If I bought at IPO it was only a small amount, to which I have generally added later on. If options were issued, I generally sold these early. In each of these holdings , I have $40-60K

 

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