Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Register

23 April 2026

Home / 195

Watch premiums and discounts in LICs

Independent Investment Research (IIR) has released its December Quarter 2016 review of the LIC sector, sometimes called Listed Managed Investments (LMI). A summary of the performance of the 34 LICs included in the Report is presented below. The full paper with more detailed coverage is available here. As this full review is of the previous quarter, investors should check latest prices which may have moved significantly.

Overall equities performance

For the December 2016 quarter, the S&P/ASX200 was up by 5.2% following the US market rally after Trump’s election. Large cap equities, and especially resources stocks, contributed most to this performance. Small caps, down 2.5% for the quarter, still managed an overall gain for the year of 13.2%. For the 12 months to December 2016, the S&P/ASX200 was up 11.8%.

LIC performance

IIR’s analysis uses two different measures. The first is total returns (share price gain or loss plus dividends) which represents the actual return received by shareholders from their investment. The second is pre-tax NTA plus dividends, which is better for evaluating manager performance.

Using this second metric, the best performing fund for the December quarter was Global Master Fund (ASX:GFL) with a 15.5% increase in portfolio value due to a strong share price performance of its core holding, Berkshire Hathaway. As the overall market performed well, so too did the majority of LICs included in the Review. However, some small cap LICs had negative returns.

If using the first metric, Westoz (ASX:WIC) was the best performer for the quarter with an 8.1% total return in share price and dividends due to its resources focus. This reduced the discount to pre-tax NTA from 16.8% at 30 September 2016 to 9.4% at 31 December 2016.

Premiums and discounts

As at 31 December 2016, 12 of the 34 LICs covered were trading at a premium to pre-tax NTA. The largest of these was Mirrabooka Investments (ASX:MIR) at 25.8%, followed by WAM Capital (ASX:WAM) and WAM Research (ASX:WAX), each at 20.7%.

At the other end of the scale, Global Master Fund (ASX:GFL) was trading at the largest discount to pre-tax NTA at 22.3%, widening from 15.8% as at 30 September 2016. Over the past three years, GFL’s discount has averaged 14.4%.

The table below shows the quarterly performance for each of the 34 funds as measured by both metrics mentioned above, along with their premium/discount to pre-tax NTA:

Leisa Bell is Assistant Editor at Cuffelinks.

  •   23 March 2017
  • 5
  •      
  •   
5 Comments
Ashley
March 22, 2017

The table describes returns in terms of “share price including dividends”. Is that different from ‘total returns’ which is a widely understood term? (or even “total returns including dividends”). Share price does not ‘include’ dividends. It should say ‘share price gain/loss plus dividends’, which is the same as total returns.

Sceptical
March 23, 2017

Its kind of pointless to even reference the movement in the NTA as the investor into the LIC structure never receives that performance. The assumption that is made is the share price will move according to the movement in the NTA. But the real performance the investor receives is just the performance in the share price (what they bought it for and then what they sell it for/what it is currently trading at) + dividends. The structure itself is flawed and surely will be replaced with active ETFs if more providers come to market to offer choice!

Cat Daddy
March 23, 2017

Ashley.

What part did I miss. The article under sub heading LIC performance reads "(share price gain or loss plus dividends)"

Graham Hand
March 23, 2017

Hi CD, good pick up but we changed the previous wording after receiving Ashley's comment. We left his comment after the article as a way to explain one of the headings in the table, which we did not change.

Graeme
March 23, 2017

One should also be aware that LICs use a number of different ways are used to report their performance to their shareholders. While all LICs publish monthly a pre and post tax NTA, that's where commonality ceases.

At the conservative end of the spectrum, some managers report performance as change in post tax NTA adjusted for dividends paid. This is in my opinion the best measure of the change in value of the long term shareholder’s investment. Other managers will adjust this for tax paid and/or fees paid. Still others will use a portfolio return, again possibly adjusted for fees and taxes. I was surprised that the one year portfolio return (before taxes and fees in the fine print) of over 15% reported by one manager, equated to only a 2% increase in the after tax NTA adjusted for dividends paid.

Portfolio return is undoubtedly a useful method for comparison against a benchmark index, though one has to ensure the benchmark is appropriate. Why one dedicated microcap manager would benchmark against the All-ords index (primarily large banks, miners and retailers) beats me.

 

Leave a Comment:

RELATED ARTICLES

Listed Investment Company deals for 2019

Latest LIC and ETF updates

LIC reporting season wrap for 2017

Firstlinks is sponsored by:
banner

Most viewed in recent weeks

Indexation implications – key changes to 2026/27 super thresholds

Stay on top of the latest changes to superannuation rates and thresholds for 2026, including increases to transfer balance cap, concessional contributions cap, and non-concessional contributions cap.

The refinery problem: A different kind of energy crisis in 2026

The Strait of Hormuz closure due to US-Iran conflict severely disrupted global energy supply chains. While various emergency measures mitigated the crude impact, the refined product market faces unprecedented stress.

3 ways to defuse intergenerational anger

With the upcoming budget increasingly likely to include bold proposals to alter the tax code I’ve outlined three incremental steps with fewer unintended consequences.

The missing 30%: how LIC returns are understated, and why it matters

The perceived underperformance of LICs compared to ETFs is due to existing comparison data excluding crucial information, highlighting the need for proper assessment and transparent reporting.

Little‑known government scheme can help retirees tap into $3 trillion of housing wealth

The Home Equity Access Scheme in Australia allows older homeowners to tap into their home equity for retirement income, yet remains underused due to lack of awareness and its perceived complexity.

Welcome to Firstlinks Edition 655 with weekend update

Many investors are on edge as geopolitical turmoil continues to impact markets, often leading to short-sighted actions. These are the three quotes that I’ve relied on during periods of volatility.

  • 26 March 2026

Latest Updates

Retirement

2 billion reasons to fix retirement income

A proposal to address Australia's 'stranded balances' in retirement by requiring super funds to transition members to pension phase at 65, boosting retirement income and reframing super as a source of income.

Investment strategies

Not much alpha left in this bet

Google redefined advertising with its innovative business model, but its dominance is now under siege from AI competitors and shifting market dynamics.

Five simple reasons why Australian cash rates are highest

Australians are suffering the highest cash rates amongst their rich country peers for five simple reasons, including outdated inflation targeting and undisciplined monetary and fiscal policies.

Investment strategies

Spending big on AI: So where’s the proof it’s working?

Business leaders must reassess AI's return on investment using new frameworks that reflect productivity, capability shifts and long-term value creation.

Economy

Double down on renewables?

Global volatility has sharpened Australia's focus on energy security. Calls for domestic fuel production clash with renewable energy goals, sparking a debate on balancing traditional and sustainable energy sources effectively.

Investment strategies

Private Credit headwinds move onshore

It’s been a volatile couple of months in markets with the ongoing conflict in Iran. For Australian private credit investors, however, large exposures to real estate lending could mean the worst is yet to come.

Property

Five reasons unlisted commercial property is an attractive allocation in uncertain times

Cromwell takes a look at replacement cost as a practical lens on relative value in commercial property. When build-new costs rise faster than asset pricing, the gap can create opportunities in well-located existing assets.

Sponsors

Alliances

Site Map

About Firstlinks

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.