It completely snuck up on me and it wasn’t until I was heading out to get a soup for lunch that I realised Wednesday just gone was one year to the day the LIC portfolio made its first purchase. I feel like a terrible parent, I hadn’t organised anything!
On July 13 the LIC portfolio kicked off with Magellan Flagship Fund (MFF) and since then it has become home to several other positions. It’s fitting the latest purchase was more MFF. Including dividends the portfolio finished its first 12 months up 6.3%. The ASX200, including dividends, was up 2.71%.
The aim of the portfolio was to outperform the market while taking a relatively passive approach, selecting the best managers available to us and letting them do the work. Twelve months in, this has been successful.
But since starting the portfolio I have had lingering thoughts about what the real purpose of the portfolio is. Does it need to beat the Australian index? It probably isn’t even fair to compare it to the ASX200 given we have a decent level of international stocks and small cap positions too. What my goal in the back of my mind is is to have less market induced stressful days for those following. Less red days, and when the red days do come, make them easier to take. That’s it.
In total there were 15 transactions with one of those being the sale of Cadence Capital Limited (CDM). All up the investment in Cadence cost the portfolio a loss of $34.71 or 0.35%. The share price was $1.425 at the time of the sale and it now sits at $1.22. We left a 5c dividend on the table by selling but we did avoid a 20c drop.
The AGF EGM: pistols at dawn
Several shots have been fired by agitating AMP Capital China Growth Fund (AGF) shareholders LIM Advisors Limited as we draw closer to the extraordinary general meeting on July 28.
The latest blow from LIM Advisors was an open letter to AGF unitholders urging them to vote for the LIC to be wound up. This would mean the fund would be liquidated and capital returned to shareholders. Currently AGF is trading at $0.89 with NTA at $1. This means investors would receive an 11% return (minus the cost of winding up the fund) if the underlying value of the portfolio did not change between now and then.
AMP argues the changes made and continuing to be made will enhance the fund and will drive shareholder value for years to come. AMP argue the vocal parties pushing for the capital return are opportunistic and short term focused and not thinking of the shareholder who wants long term direct China exposure. To counter this argument, LIM Advisors has been invested in AGF since 2010, so you could hardly call them short term focused.
LIM has been joined by Wilson Asset Management and recently global investment company Gramercy Funds Management. It is difficult to tell if shareholders will be swayed by the agitators but what may sway them is the fact AMP has pocketed over $60m in fees since inception. We will find out on July 28.
India Fund IPO: reheating leftovers
Doing the rounds again is a prospectus for a new (but old) LIC focusing on investing in India. If you are planning on picking up a copy make sure you check out this blog post on the background.
I’ll save you a click with this excerpt:
It’s hard, if not impossible, to recommend a re-heated float like this, especially when a handful of unlisted funds led by Fidelity, emerging market ETFs and Asian LICs like Platinum Asia (ASX:PAI) and Ellerston Asia Investments (EAI) offer investors more reliable Indian investment exposure. Full marks, though, to Pereira for persistence. But that’s just about the only thing to admire in this latest re-heated IPO.