FAT PROPHETS IN ASX LICs (FOR FUND MANAGERS, NOT SHAREHOLDERS)
Here is my medium / long term ASX LIC performance comparison of the most popular LICs against relevant ASX index ETFs.
Some years ago, I set up a sharesight portfolio of a lot of the large, popular ASX LICs to see at a glance how their performance looked in terms of total shareholder return. Those wanting to go back and look at similar posts on performance to 2022, 2023 or 2024 can click on those links respectively.
One important point to note about this is that it will include any movements in the discount / premium to NTA in the numbers. The longer the time frame we view the results though, this factor should become less material to the numbers. On this occasion, following up on last year’s list, we are talking about a period of 6 years.
This year out of curiosity, I went and checked another list of some of the bunch under $500 million in AUMs. I chose a list where nearly everyone could display 7 years of performance.
I got tired of ASX LICs presenting their own performance numbers. They can exclude all management fees and expenses, effects of dilutive capital raisings as they please. Or simply not display them if they think the numbers are poor.
The first list that follows on from previous years, I simply looked up all ASX LICs in the equity space and used those above $500 million at the time.
I used Sharesight to create some trades assuming I bought the securities on the last day in 2018 for the first list containing 6-year data, or the last day in 2017 for the second list with returns over 7 years. Therefore my performance table here is simply total shareholder return. As sharesight users may be familiar with, it displays returns including benefit of grossed up dividends in terms of franking.
The new list I added this year was for the purpose of getting an indication of some of the very long running LICs that have much smaller AUMs. It may have missed many, I just glanced at a longer list and went with a bunch that from my memory may have been around close to a decade, or more in some cases.
BEST ASX LISTED INVESTMENT COMPANIES (LICs) 2025
So which ASX LICs performed best in the 6 years leading up to 2025? (with the caveat past performance in not indicative of future results!).
The following table coming up captures the performance of many of the most popular ASX Listed Investment Companies (LICs) for the 6 calendar years leading up to January 1, 2025.
Below is the table. I also included in the list popular ETFs. These are Vanguard Australian Shares Index ETF (ASX:VAS) & Vanguard MSCI Index International Shares ETF (ASX:VGS) which might interest many in terms of doing a comparison.
BEST SMALLER ASX LISTED INVESTMENT COMPANIES (LICs) 2025
TRIBECA GLOBAL NATURAL RESOURCES REVIEW (ASX:TGF)
In reviewing the performance of Tribeca Global Natural Resources Ltd (ASX:TGF), please note that 7-year data was not available as the LIC has not been around quite that long. The start date used was therefore when it listed in October 2018 and represents a bit over 6 years. Also note that I have not factored in the further losses that would have occurred if TGF investors participated in the capital raise (shares issues at $2.10), conducted in early 2023.
I also observed at the TGF AGM, the board expressed a wish for further shareholder feedback on the matter of the recent strategic view. If you have happen to be a TGF shareholder and have read this far, feel free to get in touch with me with any feedback you might have. Ideally, in 2025 shareholders might consider posing some further relevant questions regarding the strategic review.
FAT PROPHETS IN ASX LICs DESPITE PERFORMANCE
Glancing at the ASX LICs table above of those with smaller AUMs, does the performance over the last 7 years look deserving of much in the way of performance fees?
Often any performance fees are a separate line item in the annual report each year. You may well be shocked if you bothered to look up the annual reports of some of these LICs during this time period. Some of the performance fees banked at times are huge in this context. In many cases I don’t see much changing here, sometimes a large amount of control over these LICs are from “strategic” shareholders which might like to vote for a continuation of business as usual. It is often claimed by such that this “skin in the game” aligns them with other smaller shareholders.
I did notice last month however, that the largest shareholders in the Fat Prophets Global Property Fund (ASX:FPP) had no affiliation with the fund manager of the LIC. Unsurprisingly, it wanted anything but “business as usual”. They firstly suggested a merger, then a wind up. No doubt any wind-up decision will be a tough one for shareholders. I can only suggest shareholders try and complete their voting in early January, to have a say on such matters. In this case, it appears they are being offered the alternative of their investment being almost worth $1 a share should they vote FOR a wind up, vs the current share price of circa 75 cents.
Looking at their long-term share price chart, it is hard to imagine much if at all capital gains tax bills would occur to most shareholders if a wind up occurred. I suppose if one was really keen to stay in REITs, how hard would it be to buy half a dozen with the wind-up proceeds? Not a bad head start on the strategy if you are using circa $1 of asset value on day 1, vs 75c in the dollar that the market tends to value FPP at. Going forward if these REITs simply sit in your brokerage account directly at least there would be no extra management fees and other expenses eating up your investment.
FAT PROPHETS WIND UP Fat Prophets Global Property Fund (ASX:FPP)
Shareholder votes like this are never an easy decision, so it’s best to hear both arguments.
Below is the ASX release about the wind up meeting that contains many reasons also why investors may want to vote for OR against this wind up.
VGI PARTNERS GLOBAL INVESTMENTS MERGER, WIND UP, TAKEOVER?
What stood out this year when I was reviewing these performance tables is firstly the sea of red amongst many ASX LICs with smaller AUMs, especially given this is over a period of 7 years!
The larger LICs look a little better, even if most look very poor versus relevant index ETFs. I couldn’t help noticing that VGI Partners Global Investments (ASX:VG1) figures still stand out amongst the worst. The aggressive buyback at least helps as a low-risk way to boost the NTA, compared to their stock picking which still struggles.
It is still somewhat surprising in this context that the brand name of VGI Partners is still being pursued here, even though the investment team is virtually entirely gone, and we see Regal’s Phil King on the monthly NTA updates.
In a VGI blog post last year, IS LIC VG1 ASX ABOUT TO WIND UP OR CONVERT TO OPEN ENDED? – Value Investing for a living, I commented on this branding issue along with other issues. Another issue was the unusual strategy of hedging the AUD. Unfortunately, this has again proved costly in 2024 for shareholders.
Somewhat ironically, the PM Capital Fund (ASX:PGF), is effectively controlled by Regal, and happens to be the best performer on the above list. In late December it was trading at a 10% premium to its after tax NTA, at the same time VGI Partners Global Investments (ASX:VG1) almost touched a 15% discount again. Some mathematicians out there may think that PGF could use their scrip to combine with VG1, such that it would be quite accretive to PGF shareholders. At the same time, VG1 shareholders might see their shares very close to NTA, with a clear mandate, i.e. PM Capital have been consistent with their strategy for a long time, not chopping and changing staff, or sudden changes in portfolio turnover and net investment exposures all the time.
SHARESIGHT REVIEW OF ASX LICs FOR 2025
Also whilst sharesight does a great job in producing the numbers, it does require my input initially, please be open to the possibility of errors! Another reason not to draw conclusions here and rely on this to make any decisions!
All the best for your investing in 2025!