Home LMIs AUI / DUI – When Old School goes New School

AUI / DUI – When Old School goes New School

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RRM recently published an article regarding AUI / DUI but under the guidance of relatively recently appointed Company Secretary James Pollard we are happy see changes are afoot. Note the new websites.  And no bad thing – AUI / DUI having nothing to hide. Both vehicles have performed relatively well and in a manner that is true to the larger cap old style LIC style. In actual fact, there is many a virtue that can be made regarding AUI/DUI, in just the same way as AFI, ARG and MLT. Specifically:

  1. As an ‘old style’ LICs, and by virtue of its capital account status / material embedded unrealised capital gains, portfolio turnover is necessarily low. The virtue of this is what you see is what you get regarding stock, sector, factor tilts. No surprises. While it is commonly stated that past performance is not indicative of future performance, old style LICs can have a persistence of relative performance, especially against other old style LICs. Again, the point is to note the relative stability and the ‘no surprises’ aspect.
  2. Stability of income and 100% fully franked dividends, and in an environment in which TDs are negative real yield as is Investment Grade bond strategies. All IG bond ETFs got slammed in Feb (3-6% drawdowns) – while that may not sound like much it will take investors 2-3 years to get their money back (and that’s a very long time-to-recover) and on what had been marketed as ‘Cash Plus’ investment vehicles. Again, the emphasis is on what an old style LIC vehicle can deliver – stability and no surprises (as per the portfolio as a whole).

There’s plenty to like in a world of ever change and uncertainty.