Good return and limited volatility makes LIC popular
Listed Investment Companies have become a popular choice for those who want to gain exposure to a professionally managed, diversified portfolio of ASX listed shares.
At the same time, the strategy of borrowing money to invest into shares or managed funds is one that has also become popular.
Specialised Private Capital Ltd has developed a geared fund investing in Listed Investment Companies.
The Leveraged Investment Companies Fund is the only fund of its type in the Australian marketplace and uses a gearing facility to invest in a portfolio of investment companies listed on the Australian Stock Exchange.
The fund has more than exceeded its performance and volatility expectations in the two years since its launch.
Gabriel Radzyminski, portfolio manager for Specialised Private Capital Ltd who conceived and manages the Leveraged Investment Companies (LIC) Fund said that not only has the fund delivered exceptional returns to investors since inception, but that it has one so with limited volatility.
Since launching in August 2005, the Fund has produced a 91% return compared to the S&P ASX/200 Accumulation (Index) benchmark return of 55% and it has done so with similar volatility to that of the Index (which is ungeared).
In the three individual months where the Index had negative returns, the LIC Fund either had positive returns or fell by considerably less.
In its worst month, the Fund fell 2.9% while the S&P ASX/200 Accumulation index lost 4.7% and the Morningstar Geared Fund Index lost 8.4%.
The aim of the fund was to deliver superior risk-adjusted returns which, to date, it has done. The objective of the Fund is to provide long-term capital growth through exposure to the Australian share market.
The Fund uses investors’ funds and borrowed funds to invest in a portfolio of investment companies listed on the Australian Stock Exchange.
The dividends paid on these investments finance the interest cost of the Fund’s borrowings.
Underpinning the investment selection process, Radzyminski said he looks for companies with good fully franked and consistent dividends.
The fund currently holds 14 companies listed on the ASX, including Milton Corporation, Australian Foundation Investment Company and StreetTracks S&P ASX/200 Index Fund.
The fund has a recommended minimum investment horizon of five to seven years. Investors and advisers can get access to Leveraged Investment Companies Fund by applying directly to Specialised Private Capital Ltd.
20-Jul-2007