When it comes to passive investment vehicles on the ASX, there's no doubt that the star of the listed investment company (LIC) has waned in recent years in favour of the exchange-traded fund (ETF). ETFs have never been more popular on the ASX than in the post-COVID years. In stark contrast, LICs have arguably fallen out of favour.
But there are some LICs that are still commanding respect on the ASX. Argo Investments Limited (ASX: ARG) is arguably one. Helped no doubt by its age and pedigree, Argo remains a popular ASX LIC. After all, it was founded way back in 1946, and was even helmed by the legendary cricketer Sir Donald Bradman for a while.
But for investors these days, little matters aside from performance. So let's have a look at how Argo measures up against its larger rival – the Australian Foundation Investment Co Ltd (ASX: AFI). We'll also look at how these two LICs compare to the index ETFs they so ferociously compete against.
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What returns have Argo investors enjoyed?
So let's jump straight into the numbers. So according to Argo itself, the LIC has delivered an average return of 7.7% per annum over the past three years on average, as of 31 July. That figure is based on the LIC's share price and assumes dividends are reinvested.
Over the past five years, it has delivered an average of 7.1% per annum. This rises to 9.7% over the past ten years.
Let's now see how that stacks up against AFIC.
How do these stack up against the ASX 200 and AFIC?
So AFIC does not report its three-year data. However, it does tell us that its share price has averaged a return of 11.6% per annum over the past five years. This extends to 12.2% per annum over the past ten years. These figures also assume dividends are reinvested, but also include the value of franking credits, which Argo doesn't.
Still, it seems that AFIC's share price has given investors greater overall shareholder returns over both the past five and ten years on average.
Both AFIC and Argo use the S&P/ASX 200 Accumulation Index as a benchmark. Many popular index ETFs on the ASX also track the ASX 200 Index. So let's see how an investment in an ASX 200 ETF like the iShares Core S&P/ASX 200 ETF (ASX: IOZ) compares to these returns.
Assuming dividend distributions are reinvested, the iShares ASX 200 ETF has delivered an average of 4.28% over the past three years on average. This rises to 7.89% per annum over the past five years, and 9.19% per annum over the past ten.
So while Argo shares may not have outperformed AFIC over the past five and ten years on average, it has managed to eke out a better performance than the ASX 200 benchmark it uses. Perhaps the LIC is not about to give way to the index ETF just yet.
