If you've been investing for a while you no doubt know just how difficult it is to beat the market. While many investors prefer to make direct share investment decisions themselves, other investors prefer to effectively outsource part or all of the day-to-day decision making process to other full time investors. Arguably, one simple way to 'outsource' is via listed investment companies (LIC) such as WAM Capital Limited (ASX: WAM).
WAM Capital just reported its full year results which showed a 14.7% increase in the Investment portfolio – equating to a 9% outperformance against its benchmark – before all fees and expenses that is.
How did WAM Capital achieve this outperformance?
Well, some of the best performing stocks in the portfolio were:
- Mantra Group Ltd (ASX: MTR)
- IPH Ltd (ASX: IPH)
- CSG Limited (ASX: CSV)
- Austal Limited (ASX: ASB)
- Corporate Travel Management Ltd (ASX: CTD)
While WAM Capital's returns may have differed depending on their entry points, had you held these five stocks for the full 12 months (or from the first trade post IPO in the case of IPH) you would have been sitting on gains of between 45% and 91% when 30 June 2015 rolled around.
Having winners like the above five in your portfolio can certainly put you on your way to outperforming in most markets!
It's worth noting that despite the impressive investment portfolio return, the share price of WAM Capital actually fell 1% over the course of financial year 2015. While shareholders may be rightly disappointed with this result, for investors looking for an opportunity to buy into any LIC, the advantage these vehicles have over unlisted managed funds is that the volatility of the share market can create appealing entry points to acquire shares in LICs compared with managed funds which will always be priced at their net tangible asset backing.
For many investors, LICs are utilised primarily as an effective way to achieve diversification to one's portfolio. In this regard, the ASX provides a wide range of options.
For investors looking for Australian blue-chip focussed LICs, Argo Investments Limited (ASX: ARG) and Australian Foundation Investment Co.Ltd (ASX: AFI) have long been the 'go-to' LICs.
Similarly, there are numerous LICs focussed on smaller and mid-market stocks such as WAM Capital and QV Equities Ltd (ASX: QVE).
Increasingly, there are also a number of internationally focussed LICs that can provide shareholders with exposure to global stock markets such as the long-established Platinum Capital Limited (ASX: PTM) and the soon to be listed Future Generation Global Investment Company Limited (ASX: FGG), which offers investors a unique investment structure that charges no management fee or performance fee but provides for 1% of net tangible assets to be donated to charity.
