We have republished a recent research report from Zenith Research, a leading investment research firm in Australia. It is an interesting and well written paper that strengthens the belief that the default way investors should access pooled investments is through wholesale managed funds.  Our interpretation of the research is that, including an extra variable in the investing process, especially one that can substantially change the success of the investment, is not worth the extra risk.  The simple fact that the share price of an individual LIC can trade at a premium to NTA or at a Discount to NTA (noting that a managed fund will always trade at NTA) just increases the chances of an investor being less successful over the duration. Investing is hard enough, without applying this factor to the outcome. The research does highlight that the same variable can potentially add extra returns to an investment if, a very same investment strategy is implemented, however nothing is guaranteed.  In reverse, if the underlying fund underperforms, the problem is most likely amplified by the fact that the market over the long term will further price such an underperformance by discounting its share price to a NTA, further deteriorating the return. The paper does argue that over the long term the risk of underperformance is reduced. However the chance that an investor will hold it over the long term, is a hard to imagine. This is one investment area that Unconventional Wisdom prefers, the Conventional; Wholesale Managed funds are superior investment vehicles than Listed Investment Companies. Enjoy the read and happy to hear your thoughts. LIC discounts– can you get more than you pay for? Despite the strong growth recorded across the Listed Investment Company (LIC) market, share prices trading away from their Net Tangible Assets (NTA) is a factor that continues to act as a barrier to entry for many investors. Owing to this dynamic, many investors have preferred to gain exposure to unlisted managed funds to avoid divergent return outcomes caused by market sentiment and trading patterns. Amidst this dynamic, Zenith has analysed the market to examine what investor returns have been generated through investing in LICs (and Listed Investment Trusts) at a range of premiums or discounts to NTA. These results provide a framework for how investors can implement transactions over the short and long-term. Logically, the propensity for LICs to trade away from their underlying NTA should provide opportunities for returns arbitrage and potentially higher yields. But this raises a number of questions: At what level is a discount to NTA a good buying opportunity? Is this a persistent phenomenon? Does this effect decay over time? Zenith believes that to a certain extent, these questions are broadly answerable. We have conducted a study of LICs using historical data on 51 vehicles (not limited to those rated by Zenith), with the following attributes…

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