This month, I’d like to depart slightly from my usual monthly commentary to talk specifically about the Affluence LIC Fund.
The Fund will celebrate its five year anniversary in two months. Given the strong returns it has achieved, it is likely to come on the radar of a wider range of potential investors and advisers at that time, as many people wait to see a five year performance history before committing to a fund. Since commencing in 2016, the Fund has delivered total returns of 12.9% per annum, including quarterly distributions of 7.3% per annum. Those returns have exceeded the Australian stock market (ASX200 including dividends) by 3.6% per annum. Pleasingly, the majority of the outperformance has occurred during periods of market decline, when the Fund has substantially outperformed the Australian stock market.
Right now, a well chosen portfolio of LICs still represents a great opportunity, but that won’t last forever. The LICs currently in the Fund portfolio trade at an average 16% discount to the value of their underlying investments, providing an obvious source of additional returns should those discounts narrow to more average levels. In addition, many of these LICs are run by investment managers we rate very highly, meaning the LICs themselves may perform very well.
All of which brings me to my point. Greg and I want to ensure the Fund remains small, in order to allow us the best chance of continuing to deliver good returns well into the future. Once the Fund reaches our target size, we will close it to new investors. Contrary to popular belief, one of the biggest advantages in investment management is less money, not more.
We have no idea how long it will take for this remaining capacity to fill up. Over the last year or two, despite the excellent performance, the Fund has grown quite slowly. That says more about our poor marketing ability, than the attractiveness of the Fund. If that trend continues, it may take some time for the remaining spots to be filled. But these things have a way of escalating quickly once people realise the window of opportunity is closing, so it could well be full in the next few months.
We wanted to make sure that everyone who has an interest in investing alongside us in the Affluence LIC Fund, get’s the chance to do so. If that’s you, here’s what you should do.
To learn more about the Fund, click here for the latest presentation.
To register for The Affluence LIC Fund webinar later this month, click here. I’ll be discussing how the Fund delivered returns of 20% plus in 2020, despite the pandemic, and how we are currently positioned.
If you have not yet invested in the Fund and would like to reserve an allocation, please reply to this email and confirm the amount you wish to invest and the expected timing of your investment (up to 30 June 2021). We’ll do our best to make sure we can accommodate you.
If you’re ready to invest right now, click here to apply or to download the PDS and application forms. The Fund is unlisted. We accept applications and withdrawals monthly, on the last business day of the month.
Finally, to ask us a question directly, you can reply to this email or give us a call during business hours on 1300 233 583.
Now, read on for our usual monthly fund reports and other interesting stuff.
Daryl and the Affluence Team
P.S. Because a lot of the LICs in the Fund ultimately invest in stocks, the Fund is impacted to a degree by movements in the stock market. If you’re not comfortable with that, the Fund may not be for you. In that case, you may wish to consider our Affluence Investment Fund.