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Australian Listed Investment Company Report

Weekly Reports | Jun 03 2022

This story features NB GLOBAL CORPORATE INCOME TRUST, and other companies. For more info SHARE ANALYSIS: NBI

Download related file: IIR-Monthly-LMI-Update_1-June-2022

A Listed Investment Company (LIC) is a listed investment vehicle that offers investors access to a diversified portfolio of shares in other companies also listed on the stock market. Also known as Listed Investment Trusts or Listed Managed Investments.

For comprehensive comparative data tables for LICs please see attached.

 LMI Market News

Vaughan Nelson Global Equity SMID Fund (Quoted Managed Fund) ((VNGS)) Commences Trading

The Vaughan Nelson Global Equity SMID Fund (Quoted Managed Fund) is a newly established Exchange Traded Managed Fund (ETMF) with the ASX code VNGS. The Fund commenced trading on 1 June 2022. The Fund provides exposure to the Vaughan Nelson Global SMID Cap strategy, which has an inception date of June 2020. The Fund is the quoted class of the investment strategy with the strategy also being offered through an unlisted unit trust. The Fund seeks to provide exposure to small and mid-cap global equities with the objective of outperforming the MSCI ACWI SMID Cap Index, after fees and expenses and before taxes, on a rolling five year basis.

[SMID – small and mid-cap]

The portfolio will be managed by Vaughan Nelson Investment Management L.P, a US based asset manager that was founded in 1970 and provides equity and fixed income strategies with US$15.5b AUM as at 31 December 2021. The Manager has a fundamental, bottom-up investment process with a targeted return approach. The portfolio only incorporates stocks that the Manager believes can generate returns of 50%+ over a three-year period (~15%p.a. compounded), in the event the investment thesis plays out as expected. The Manager seeks to take advantage of short-term inefficiencies to generate excess returns. The portfolio will typically comprise 40-80 positions with the allocation to a single investment typically not exceeding 5% at the time of investment and the top 10 holdings typically accounting for 20%-25% of the portfolio. The strategy is managed in a benchmark unaware manner with the portfolio typically having an active share of greater than 90%. The Manager uses proprietary factor analysis to ensure that the portfolio is diversified across factors and that the strategy does not have unintended factor bets. This allows the Manager to build a relatively concentrated portfolio while being representative of the investment universe from a risk profile perspective.

Independent Investment Research (IIR) has assigned the Vaughan Nelson Global Equity SMID Fund (Quoted Managed Fund) an Investment Grade rating. The rating should be considered in conjunction with the full report which can be found on the IIR website (

IIR Reaffirms Recommended Plus Rating for NB Global Corporate Income Trust ((NBI))

During the month, IIR reaffirmed its Recommended Plus rating for NBI. NBI is the only actively managed listed managed investment on the ASX that focuses solely on global high yield bonds. The Trust seeks to provide unitholders with a consistent and stable monthly income stream, while achieving an attractive level of total return over a full market cycle. The Trust has met its target yield objective since listing. NAV [net asset value] volatility is expected to be heightened in the short-to-medium term given the current inflationary environment and forecast interest rate rises. The price of bonds has an inverse relationship with interest rates which will drive this volatility. However, it’s important to note that the portfolio is actively managed and therefore the current environment will present investment opportunities as well. The Trust has traded at a discount to NAV since the market shock in 2020 and the recent market volatility has seen the discount expand. The Trust has a unit buy-back in place to assist with addressing the discount however we believe performance and unitholder engagement will be the key drivers to managing the discount. The full report can be found on the IIR website.

IIR Reaffirms Recommended Rating for ECP Emerging Growth Limited ((ECP))

During the month, IIR reaffirmed its Recommended rating for ECP. ECP provides exposure to a long only concentrated portfolio of ex-50 ASX-listed companies. The Company’s objectives are to: (1) provide medium-to-long term capital growth and income through investing in a portfolio of small and mid-cap Australian companies; (2) preserve and enhance the NTA [net tangible asset] backing per share; and (3) provide shareholders a fully franked dividend, which over time, will grow at a rate in excess of the rate of inflation. ECP has largely delivered on its investment objectives to date, with shareholders benefiting from a regular and growing fully franked dividend. The Manager has a disciplined investment process that has seen the portfolio outperform the broader market over medium-to-long term periods. Recent volatility in the portfolio has seen the portfolio underperform over the 12-months to 31 March 2022 and highlights the additional risk associated with concentrated portfolios and smaller cap stocks. Alignment of interest is strong with the CIO of the Manager, Dr. Emmanuel Pohl, being the largest shareholder of the Company, owning ~30% of the shares on issue. A key drawback of the Company is the limited liquidity with the Company having just 18.3m shares on issue and a small free float. We attribute the lack of liquidity as a key contributor to the discount to NTA that the Company has traded at throughout its history. The lack of liquidity is not as much an issue for long-term investors that have no intention of exiting the investment, however can be an issue for those seeking to enter or exit the stock in a timely manner. The full report can be found on the IIR website.

VGI Shareholders Vote in Favour of Merger With Regal

At the VGI Partners Limited ((VGI)) Annual General Meeting held on 27 May 2022, shareholders voted in Favour of the merger of VGI with Regal Funds Management Pty Limited (Regal). The merger is expected to be complete on or around 3 June 2022. As was previously announced, upon the completion of the merger, VGI is expected to change its name to Regal Partners Limited with the ticker to change to RPL.

The VGI Board declared a special dividend of $0.397 per share, fully franked, to be provided to eligible VGI shareholders on the register on 2 June 2022, subject to the merger becoming effective, and is expected to be paid on or around 9 June 2022.

WHF Reports Investment Income Uplift of 55.8% in Full Year Results

Whitefield Limited ((WHF)) released its full year results on 18 May 2022 for the year ended 31 March 2022. The Company reported a strong uplift in Investment Income, increasing 55.8% on the pcp to $19.87m. Net profit increased 71.0% on the pcp to $16.8m. The Company maintained the final dividend at 10.25 cents per share, fully franked, payable in June, with a total full year dividend of 20.5 cents per share, fully franked. The Dividend Reinvestment Plan (DRP) and Bonus Share Plan (BSP) will be available for use with the dividend declared for ordinary shares. The BSP provides shareholders the opportunity to elect to relinquish their right to a dividend, and instead receive bonus shares of equivalent market value. The Retained Earnings and Reserves as at 31 March 2022, provide substantial dividend coverage.

MXT Seeking to Raise Up To $235.6m Through Placement to Wholesale Investors

Metrics Master Income Trust ((MXT)) announced a Wholesale Investor Placement on 30 May 2022. MXT is seeking to raise up to $235.6m through the issue of up to 117.8m units at $2.00 per unit. The new units are being issued under the Trust’s available placement capacity and therefore does not require unitholder approval. New units issued are expected to commence trading on 8 June 2022. In the event the Placement is fully subscribed, MXT will have 903.3m units on issue.

Proceeds raised from the Placement will be invested in accordance with the Trust’s investment mandate and target return. MXT has undertaken a number of capital raisings since listing in October 2017, with the Trust raising over $1b post listing.

BTI Pockets $118m Cash From Sale of Instaclustr

As was reported in our previous monthly update, on 8 April 2022, Bailador Technology Investments Limited ((BTI)) announced Instaclustr entered into an agreement to be acquired by NetApp, a global cloud-led, data-centric software company that is listed on the NASDAQ.

On 25 May 2022, BTI confirmed that all conditions of the sale agreement had been satisfied and the transaction has been completed. As a result of the transaction, BTI received net cash proceeds of AUD$118m through the sale of its investment in Instaclustr. The net cash proceeds represent a return of 14.2x on BTI’s investment.

As a result of the large cash inflow, the Company has announced the implementation of a regular dividend policy, which will see the payment of a semi-annual dividend for the foreseeable future. The Company will seek to pay a fully franked dividend of 4%p.a of the pre-tax NTA, payable half yearly. Each semi-annual dividend will equate to 2% of the pre-tax NTA at 30 June and 31 December each year. The Company has announced that it will pay a fully franked special dividend to shareholders on the release of the FY22 results of 2% of the pre-tax NTA. This will result in a dividend equating to 4% of pre-tax NTA for the FY22 period (the 2% regular dividend and 2% special dividend).

Based on the latest NTA release for 30 April 2022 and the share price as at 31 May 2022, BTI is trading at a substantial discount to both pre-tax and post-tax NTA of 30.3% and 17.9%, respectively. The 4% dividend would represent a net yield of 5.7% based on the pre-tax NTA as at 30 April 2022 and the share price at 31 May 2022.

Mike Baird to Become Chair of Future Generation Australia

Future Generation Australia Limited ((FGX)) announced that Mike Baird will join board of directors as Chairman, effective 31 July 2022. Mr. Baird will be taking over from Jonathan Trollip, who is retiring from the board after being the Chairman of FGX since its inception in 2014. Mr. Baird, a former Premier of NSW, is currently the CEO of HammondCare and Board Member of Cricket Australia and Surfing Australia. Prior to this, he was a member of the National Australia Bank executive leadership team. Mr. Baird will remain as an ambassador for Bear Cottage and Southern Youth Family Services, but will be standing down as Chair of the Australian Business Growth Fund.

CAM Provides Update on Dividend Coverage

On 30 May 2022, Clime Capital Limited ((CAM)) provided an update to the market regarding the franking credits and profit reserve accounts. These are important to the Company given its core objective is to provide an above market fully franked dividend yield.

CAM expects the franking balance to reach $2.7m as at 30 June 2022 with a profit reserve of $29.9m. The profit reserve provides dividend coverage of ~21 cents per share and the expected franking balance provides CAM the ability to pay fully franked dividends of up to 4.5 cents per share before inflows of further franking credits.

CAM declared a June quarter dividend of 1.28 cents per share in May 2022. This takes the total dividends declared for FY22 to 5.36 cents per share, an increase of 12.8% on FY21.

LSF Renews On-Market Buy Back Program

L1 Long Short Fund Limited ((LSF)) has announced the renewal of the on-market share buy-back program. The program permits LSF to buy back up to 10% of the shares on issue in the 12-month period commencing 1 June 2022. The current intention of the board is to buy back shares if the LSF share price trades at a discount to post-tax NTA of 10% or more.

Based on the NTA release for 27 May 2022 and the share price as at 31 May 2022, LSF was trading at a discount to post-tax NTA of 5.9%.

Independent Investment Research, “IIR”, is an independent investment research house based in Australia and the United States. IIR specialises in the analysis of high quality commissioned research for Brokers, Family Offices and Fund Managers. IIR distributes its research in Asia, United States and the Americas. IIR does not participate in any corporate or capital raising activity and therefore it does not have any inherent bias that may result from research that is linked to any corporate/ capital raising activity.

IIR was established in 2004 under Aegis Equities Research Group of companies to provide investment research to a select group of retail and wholesale clients. Since March 2010, IIR (the Aegis Equities business was sold to Morningstar) has operated independently from Aegis by former Aegis senior executives/shareholders to provide clients with unparalleled research that covers listed and unlisted managed investments, listed companies, structured products, and IPOs. IIR takes great pride in the quality and independence of our analysis, underpinned by high caliber staff and a transparent, proven and rigorous research methodology.


Research analysts are not directly supervised by personnel from other areas of the Firm whose interests or functions may conflict with those of the research analysts. The evaluation and appraisal of research analysts for purposes of career advancement, remuneration and promotion is structured so that non-research personnel do not exert inappropriate influence over analysts.

Supervision and reporting lines: Analysts who publish research reports are supervised by, and report to, Research Management. Research analysts do not report to, and are not supervised by, any sales personnel nor do they have dealings with Sales personnel

Evaluation and remuneration: The remuneration of research analysts is determined on the basis of a number of factors, including quality, accuracy and value of research, productivity, experience, individual reputation, and evaluations by investor clients.


IIR restricts research analysts from performing roles that could prejudice, or appear to prejudice, the independence of their research.

Pitches: Research analysts are not permitted to participate in sales pitches for corporate mandates on behalf of a Broker and are not permitted to prepare or review materials for those pitches. Pitch materials by investor clients may not contain the promise of research coverage by IIR.

No promotion of issuers’ transactions: Research analysts may not be involved in promotional or marketing activities of an issuer of a relevant investment that would reasonably be construed as representing the issuer. For this reason, analysts are not permitted to attend “road show” presentations by issuers that are corporate clients of the Firm relating to offerings of securities or any other investment banking transaction from that our clients may undertake from time to time. Analysts may, however, observe road shows remotely, without asking questions, by video link or telephone in order to help ensure that they have access to the same information as their investor clients.

Widely-attended conferences: Analysts are permitted to attend and speak at widely-attended conferences at which our firm has been invited to present our views. These widely-attended conferences may include investor presentations by corporate clients of the Firm.

Other permitted activities: Analysts may be consulted by Firm sales personnel on matters such as market and industry trends, conditions and developments and the structuring, pricing and expected market reception of securities offerings or other market operations. Analysts may also carry out preliminary due diligence and vetting of issuers that may be prospective research clients of ours.


IIR prohibits research analysts from soliciting or receiving any inducement in respect of their publication of research and restricts certain communications between research analysts and personnel from other business areas within the Firm including management, which might be perceived to result in inappropriate influence on analysts’ views.

Remuneration and other benefits: IIR procedures prohibit analysts from accepting any remuneration or other benefit from an issuer or any other party in respect of the publication of research and from offering or accepting any inducement (including the selective disclosure by an issuer of material information not generally available) for the publication of favourable research. These restrictions do not preclude the acceptance of reasonable hospitality in accordance with the Firm’s general policies on entertainment, gifts and corporate hospitality.


This publication has been prepared by Independent Investment Research (Aust) Pty Limited trading as Independent Investment Research (“IIR”) (ABN 11 152 172 079), an corporate authorised representative of Australian Financial Services Licensee (AFSL no. 410381. IIR has been commissioned to prepare this independent research report (the “Report”) and will receive fees for its preparation. Each company specified in the Report (the “Participants”) has provided IIR with information about its current activities. While the information contained in this publication has been prepared with all reasonable care from sources that IIR believes are reliable, no responsibility or liability is accepted by IIR for any errors, omissions or misstatements however caused. In the event that updated or additional information is issued by the “Participants”, subsequent to this publication, IIR is under no obligation to provide further research unless commissioned to do so. Any opinions, forecasts or recommendations reflects the judgment and assumptions of IIR as at the date of publication and may change without notice. IIR and each Participant in the Report, their officers, agents and employees exclude all liability whatsoever, in negligence or otherwise, for any loss or damage relating to this document to the full extent permitted by law. This publication is not and should not be construed as, an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Any opinion contained in the Report is unsolicited general information only. Neither IIR nor the Participants are aware that any recipient intends to rely on this Report or of the manner in which a recipient intends to use it. In preparing our information, it is not possible to take into consideration the investment objectives, financial situation or particular needs of any individual recipient. Investors should obtain individual financial advice from their investment advisor to determine whether opinions or recommendations (if any) contained in this publication are appropriate to their investment objectives, financial situation or particular needs before acting on such opinions or recommendations. This report is intended for the residents of Australia. It is not intended for any person(s) who is resident of any other country. This document does not constitute an offer of services in jurisdictions where IIR or its affiliates do not have the necessary licenses. IIR and/or the Participant, their officers, employees or its related bodies corporate may, from time to time hold positions in any securities included in this Report and may buy or sell such securities or engage in other transactions involving such securities. IIR and the Participant, their directors and associates declare that from time to time they may hold interests in and/or earn brokerage, fees or other benefits from the securities mentioned in this publication.

IIR, its officers, employees and its related bodies corporate have not and will not receive, whether directly or indirectly, any commission, fee, benefit or advantage, whether pecuniary or otherwise in connection with making any statements and/or recommendation (if any), contained in this Report. IIR discloses that from time to time it or its officers, employees and related bodies corporate may have an interest in the securities, directly or indirectly, which are the subject of these statements and/or recommendations (if any) and may buy or sell securities in the companies mentioned in this publication; may affect transactions which may not be consistent with the statements and/or recommendations (if any) in this publication; may have directorships in the companies mentioned in this publication; and/or may perform paid services for the companies that are the subject of such statements and/or recommendations (if any). However, under no circumstances has IIR been influenced, either directly or indirectly, in making any statements and/or recommendations (if any) contained in this Report. The information contained in this publication must be read in conjunction with the Legal Notice that can be located at

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