Boutique fund manager Affluence Funds Management has opened its successful Affluence LIC Fund to all investors in Australia and New Zealand, having previously only been available to high net worth investors. The Affluence LIC Fund is the only fund available that invests purely in ASX Listed Investment Companies (LICs).
The Affluence LIC Fund has delivered double-digit returns since commencing in 2016, while having only around half the volatility of the ASX200. Affluence CEO Daryl Wilson said the Fund was set up to take advantage of the abundance of opportunities in the LIC market, particularly where LICs trade at unusually large discounts to NTA.
"Most investors concentrate their holdings in a few of the largest LIC's", Mr Wilson said. "But the real opportunities, the places where we're finding bargains right now, are outside that group."
Mr Wilson said there were now over 100 LICs, and more coming to market. Despite that, the sector is under-researched and has very few institutional investors. This provides a significant source of opportunities.
"We've chosen to make the fund available because of a specific opportunity right now, where we are seeing discounts at levels not seen for years," Mr Wilson said. "It's a very unusual situation, where you can access a wide range of very good LIC managers with impressive long term track records, at discounts averaging around 15%."
"We think a range of factors, including an increase in activist investors coming on to LIC registers, will act as a catalyst to close the discount gap," Mr Wilson said. "We are specifically targeting those LICs where we see the most potential for those discounts to close."
The Affluence LIC Fund holds a portfolio of over 30 LICs, at an average discount to NTA of 16%. In addition to the unique investment opportunity, the Affluence LIC Fund demonstrates many of the investor-friendly features common to all Affluence funds including quarterly distributions (targeting a 5% annual income yield), zero fixed fees (performance fees only) and monthly, easy to read investor reports.
Mr Wilson said that while the Fund is now open to new investors, it will only remain so until capacity is reached. "Contrary to what most people think, one of the best advantages a fund manager can have is to be managing less money, not more", Mr Wilson said. "For this reason, we're carefully managing overall capacity in this Fund. By doing this, we can find and invest in opportunities that larger fund managers have no chance of executing."
