advertising

How to get high yields with LICs

Tony Featherstone

Listed investment companies are suitable for conservative investors seeking higher yield with greater diversification and active funds management that aims to do better than the broad market.

The oft-maligned sector is attracting more interest as regulatory changes make it easier for LICs to pay dividends. The largest LICs, such as Australian Foundation Investment Company and Argo Investment, yield more than 5 per cent fully franked and have a good record of increasing dividends.

Their yield compares well with yield ETFs, but the big difference is LICs offer active management that could return more than an index – although larger ones are typically long-term, buy-and-hold investors.

ETF issuers are often keen to promote the underperformance of many active managers relative to the index against which their performance is gauged, after fees. But that underplays the benefits of a good manager that can minimise losses and maintain yield during market downturns.

Another LIC attraction is the ability to buy at a discount to pre-tax net tangible assets.

The other attraction is the close-ended structure of LICs, meaning their managers do not have to worry about fund inflows and outflows that can force buying or selling decisions at the wrong time.

This is a problem that sometimes blights open-ended managed funds in periods of heavy redemptions.

How to get high yields with bonds

Comments

Market Summary

Price % Chg
NST NTH STAR $ 1.235 - 7.84%
LYC LYNAS $ 0.068 - 6.85%
BKN BRADKEN $ 3.590 + 6.53%
RMD RESMED $ 5.720 + 6.52%
LEI LEIGHTON $ 21.070 + 5.40%
SGN STW COMM $ 1.150 + 5.02%
PDN PALADIN $ 0.330 - 4.35%
BDR BEADELL $ 0.330 - 4.35%
TEN TEN NET $ 0.235 - 4.08%
QAN QANTAS $ 1.425 + 3.64%

Commodities

Price Change % Chg
BRENT SPOT (USD/BBL) 86.280 0.000 0.00%
LIGHT CRUDE DEC4 (USD/BBL) 81.320 - 0.770 - 0.94%
NAT GAS NOV14 (USD/MMBTU) 3.631 + 0.009 + 0.25%
Bid Ask Bid Chg Bid % Chg
GOLD (USD/OZ) 1230.34 1231.11 - 1.55 - 0.13%
SILVER (USD/OZ) 17.17 17.23 + 0.02 + 0.12%
PLATINUM (USD/OZ) 1242.50 1252.50 - 6.10 - 0.49%
PALLADIUM (USD/OZ) 776.10 782.10 - 1.10 - 0.14%

Markets Data »

Currencies

AUD USD EUR JPY GBP
AUD AUD 0.8796 0.6942 95.11 0.5466
USD 1.1366 USD 0.7892 108.1 0.6215
EUR 1.4397 1.2669 EUR 136.98 0.7873
JPY 0.0105 0.0092 0.0073 JPY 0.0057
GBP 1.8282 1.6088 1.2697 173.9 GBP

Markets Data »

Stock price lookup

My Watchlists

You need to be logged in to see your watchlists.

My Portfolios

You need to be logged in to see your portfolios.