Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
WAM global has recently announced its latest result showing its net tangible asset before tax rising from 258.7 c/share to 271, yet its share price has hardly moved. Its dividend is rising every year, with gross up dividend of 7.7% and has a profit reserve of 87.3 c. Can you explain why the current share price isn’t closer to its NTA?
Hi Kenneth,
WAM Global (WGB) is a bit of an anomaly in the WAM stable insofar as it has regularly traded below NTA since inception in 2018 against the majority of other WAM products that usually trade at or above. Performance is the reason for this (we believe) with the portfolio below its benchmark by nearly 4% pa since inception (pre-fees) and is trading around the same price it listed.
Good performance creates interest and demand for an LIC, and we see this time and time again, when performance is strong, investors bid up the LIC and vice versa when things are not so strong. LSF is a good example of this and another one that has had weaker performance of late and now trades at a discount. It’s also the reason why WAM is now moving more towards unlisted unit trusts for new funds, and away from the LIC structure they’ve been known for to alleviate discounts to NTA’s.
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