Argo Investments Limited: Did it beat the market in 2018?

Like many Australian fund managers, listed investment company Argo Investments Limited failed to outperform the market in the second half of 2018.

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Listed investment company Argo Investments Limited (ASX: ARG) this morning announced its half-yearly results for the year ended 31 December 2018 and a 16 cents per share interim dividend payable on 8 March. The Argo share price is up 0.9% to $7.91.

Argo is a major Australian investment company with $5.3 billion in assets and a portfolio of around 100 ASX companies. Like many of its peers, the fund underperformed the ASX 200 over the period with its investment performance  of -8.3% after all costs and tax compared to the benchmark's -6.8%. More positively, Argo's share price returned -3.0%, outperforming the market by 3.8%.

The half-year profit results were strong relative to its previous corresponding period, driven largely by a one-off non-cash income item from the demerger of Coles Group Ltd (ASX: COL) from Wesfarmers Ltd (ASX: WES). Profit was up 42.2% and the 16¢ interim dividend was 0.5¢ higher.

The results weren't quite as impressive on a more normalised basis, however. Profit was up only 9.6%  if the effect of the Coles demerger is excluded.

Other drivers of performance over the period include higher dividends from BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), CSL Limited (ASX: CSL), Macquarie Group Ltd (ASX: MQG) and Ramsay Healthcare (ASX: RHC).

Argo's outlook for 2019

Argo says that while the recent pull back in valuations has made for more attractive opportunities, the company remains cautious due to not only the widely discussed global risks, but also local uncertainties surrounding the Royal Commission, housing downturn and the federal election.

Motley Fool contributor Cale Kalinowski has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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