Naos Asset Management has confirmed the magnitude of SMSF interest in listed investment companies (LIC), having experienced significant inflows from the sector since the inception of its two offerings in 2005.
“If you look at our register, even though we’re only a small LIC, we got about $50 million [of funds under management] and out of that 80 per cent is SMSF money,” Naos Asset Management managing director Sebastian Evans told selfmanagedsuper.
Evans explained it was the direct investing characteristic of LICs that SMSFs were finding appealing, but downplayed the importance of the level of transparency associated with those types of investment vehicles in regard to individuals running their own super funds.
“The ability to be able to invest directly is a big factor. People say transparency, but I think what we disclose in our monthly reports and annual reports is very similar to what you get from a managed fund,” he said.
“Some managed funds might be different, but I would say transparency is very good, whether or not it’s ordinarily bettering a LIC as opposed to a managed fund.”
In regard to Naos’s offerings, he said there was more SMSF interest in the manager’s Emerging Companies Long Short Equity Fund as opposed to its standard Long Short Equities Fund.
“We find a lot of planners are running model portfolios but can’t recommend investment in either small caps or emerging companies,” he said.
“So they look to us because we have a good name and allocate say 2 per cent of the portfolio to the LIC to get that type of exposure.
“And it’s all SMSF money without a doubt.”
In an effort to further strengthen its position in the market, Naos has just launched its second LIC, the Absolute Opportunities Company, on the Australian Securities Exchange.
The new offering will invest in domestic and overseas equities, but also has the ability to have a 100 per cent portfolio cash holding, and is aiming to generate a return of 4 per cent a year in income and provide as many franked dividends on a quarterly basis as possible.