2 exciting LICs I’d buy in December 2021

I think there are some very attractive listed investment companies (LICs) that could be worth buying in December 2021.

LICs are an effective way to invest in a whole group of shares through a single investment. I think they offer good diversification.

It’s also worth knowing that some LICs on the ASX trade at a cheaper valuation than the underlying assets (shares) are valued at. Essentially, you can buy a $1 basket of shares for $0.90 or even $0.80 of cash.

However, it’s important to have faith in the investment process of the fund managers in charge of the LICs.

NAOS Small Cap Opportunities Company Ltd (ASX: NSC)

This is a LIC that targets small cap ASX shares with market capitalisations of between $100 million and $1 billion.

Naos, the fund manager, operates with a number of investment beliefs – value with long-term growth, quality over quantity, invest for the long-term, ignore the index and give pure exposure to industrials.

It really does believe in investment concentration, with only nine investment positions at the end of October 2021 such as COG Financial Services Ltd (ASX: COG) and Big River Industries Ltd (ASX: BRI).

The LIC has committed to paying a growing stream of dividends for shareholders. The last 12 months of dividends amounts to a yield of 8.1% when franking credits are included.

At the current NSC share price of $0.88, it’s currently at a 21% discount to the pre-tax NTA (share basket) value of $1.11 at the end of October 2021. The NTA may have fallen since then, but I think the discount could still be very attractive.

MFF Capital Investments Ltd (ASX: MFF)

MFF Capital is one of the older, biggest and most attractive LICs on the ASX. It has low costs compared to its size, which are fixed, so it gets even cheaper as it becomes bigger.

I really respect the fund manager of MFF – Chris Mackay – who is long-term focused, considered and very effective.

The LIC finds global blue chips that are good value and have long-term return prospects. At the latest disclosure, some of the holdings were: Visa, Mastercard, Home Depot, Amazon, Alphabet, Meta Platforms (Facebook), Microsoft, CVS Health and Bank of America.

MFF also has a goal of steadily growing the dividend for shareholders. It is looking to grow the half-yearly dividend to 5 cents per share, which would take the full year dividend to 10 cents per share. That’s a dividend yield of 4.9% including franking credits.

In terms of the value, MFF shares are priced at a 13.5% discount to the pre-tax NTA at the end of November 2021, which is a price attractive enough that Chris Mackay is buying shares – I usually take that as a buy signal for MFF Capital.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report — or get it emailed to you — for FREE by CLICKING HERE NOW or the button below.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

At the time of publishing, Jaz owns shares of MFF Capital and NAOS Small Cap Opportunities Company.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.