I think that listed investment companies (LICs) are a very useful, underrated way of investing in shares.
Investors can get diversification as most LICs have portfolios of shares/assets. I also think that they’re typically good options for dividend income as well.
Here are two think I think could be good value, pay decent dividends and hopefully grow in capital value too:
MFF Capital Investments Ltd (ASX: MFF)
I think that MFF ticks all the boxes.
When it comes to dividend income, the board is planning to increase the annual dividend payout to $0.10 per share.
On the returns front, I think it has good long-term growth potential with the portfolio that it has put together with names like Visa, Mastercard, Home Depot and Amazon at the top of the portfolio holdings.
I like and appreciate the investment style of the portfolio manager Chris Mackay, who looks for good value global blue chips with good growth potential.
One of the most attractive things about the structure is that it has relatively fixed costs, which are low as a percentage of the total assets.
Finally, I think it looks attractive value. The latest pre-tax net tangible assets (NTA) per share was $3.30. The MFF share price is at a 13% discount to this.
Future Generation Global Investment Co Ltd (ASX: FGG)
Future Generation Global is another LIC that is focused on international shares.
But it’s not just one portfolio of shares. It is actually invested in multiple funds of fund managers that invest in global shares.
Some of the names in the portfolio include: Munro Partners, Cooper Investors, Marsico, Nikko AM, Caledonia and WCM. Future Generation Global has selected these managers because it thinks these are the best ones that Aussies can get access to.
But these fund managers don’t charge money like they do with their normal funds. Indeed, they work for free. No management fees, no performance fees.
They work for free so that Future Generation Global can donate 1% of its net assets each year to youth mental health charities. That’s where the name ‘Future Generation’ comes from.
The Future Generation Global portfolio has performed quite well – over the last five years it has produced an average return per year of 13.9%. It aims to provide lower volatility.
Future Generation Global is also looking to grow its dividend for shareholders.
