Monthly Listed Investment Trust Report – Mar 2025

Australia | 12:21 PM

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.

Note: For comprehensive comparative data tables for LICs and ETFs please see document attached.

IIR LMI Research
Below we provide a summary of the completed LMI reviews since our last newsletter. The reviews include VGI Partners Global Investments Limited ((VG1)), Regal Asian Investments Limited ((RG8)), Regal Investment Fund ((RF1)), Perpetual Equity Investment Company Limited ((PIC)), Argo Investments Limited ((ARG)) and the initiation of coverage for Whitefield Income Limited ((WHI)).

All reviews are available from the IIR website (www.independentresearch.com.au) or can be requested from the Managers.

VGI Partners Global Investments Limited (ASX: VG1)
VGI Partners Global Investments Limited is a listed investment company (LIC) that provides exposure to a concentrated long/short portfolio of global securities. The Company has a track record of over 7 years after listing in September 2017.

The portfolio is managed by Regal Partners Limited ((RPL)), an ASX-listed, specialist alternative investment manager. RPL was formed in June 2022, following the merger of VGI Partners Limited and Regal Funds Management Pty Limited, and currently has an equity interest in 8 alternative asset managers with AUM of $17.2
billion as at 30 September 2024.

Since the merger of VGI Partners and Regal Funds Management there has been a number of changes to VG1's investment team and strategy. Phil King has assumed the role of Lead Portfolio Manager for VG1 after the departure of the previous Portfolio Manager, Rob Luciano, in November 2023.

The Company has an absolute return objective of 10%-15%p.a., net of fees, over the long-term. The Company will seek to achieve this investment objective through the investment in a concentrated portfolio of global equities, typically comprising 20-40 long investments and 20-40 short investments. The portfolio has a maximum net exposure limit of 100% and a maximum gross exposure limit of 200%.

The Company amended the investment guidelines, effective 1 July 2024, to increase the level of diversification in the portfolio and increase the potential long and short
exposure. The Manager is paid a fee of 1.50%p.a, plus GST, of the net assets of the Company and is eligible for a performance fee of 15%p.a. of the increase in the value of the portfolio, subject to a High Water Mark, reflecting the absolute return objective of the Company.

IIR has assigned VG1 a Recommended rating (previously Recommended Plus). There are a number of positive attributes with regards to the Company, including the benchmark unaware nature of the investment strategy and the low correlation of returns potentially providing diversification to an investor's global equities allocation, strong alignment of interest of the Manager and the narrowing of the discount over the last 12-months which has provided a significant boost to shareholder returns.

There have been numerous changes to the team managing the VG1 portfolio in the last 18 months which has resulted in changes to the way the portfolio is managed and the exposure for investors, albeit investors are still getting exposure to a long/short portfolio of global equities. We view Phil King as a highly experienced and capable manager of long/short portfolios and are expecting the performance outcomes to be improved under his supervision.

However, the additional responsibility of Lead Portfolio Manager for another portfolio further stretches the number of mandates for which he is responsible. While performance has improved under the Lead Portfolio Manager, the Company has fallen short of delivering on its investment objective to date and we view the Company
to still be settling on its identity under the management of the refreshed team.

Regal Asian Investments Limited (ASX: RG8)
Regal Asian Investments Limited is a listed investment company (LIC) that provides exposure to a long/short portfolio of securities that are listed, or are expected to soon be listed, in Asia or with a material exposure to Asia. The Company has just surpassed its 5 year anniversary, listing in November 2019. The portfolio is managed by Regal Asian Investments Management Pty Limited, a wholly owned subsidiary of Regal Partners Limited, an ASX-listed specialist alternative investment manager.

Since the merger of VGI Partners Limited and Regal Funds Management there has been a number of changes to RG8's investment team and the management of the portfolio. Phil King has been the Lead Portfolio Manager since mid-2022, taking over the role from Rob Luciano, who subsequently left the business in late 2023.

The Company has an absolute return objective, seeking to generate a return of 10%-15%p.a, net of fees, over the long-term. The Company employs a long/short strategy with the portfolio designed to be a benchmark unaware, high conviction portfolio.

Typically the portfolio will comprise 15-30 long positions and 5-25 short positions. The top 10 long positions often account for greater than 60% of the portfolio with the portfolio typically having a long bias. Net exposure of the portfolio is limited to 100% and gross exposure is limited to 200%.

There are some high level stock position limitations to ensure a minimum level of diversification, however the mandate is flexible with no sector or country limitations
within the investment universe. The Manager is paid a fee of 1.50%p.a, plus GST, of the net assets of the company and is eligible for a performance fee of 15%p.a. of the increase in the value of the portfolio, subject to a High Water Mark, reflecting the absolute return objective of the Company.

IIR has maintained a Recommended rating for RG8. RG8 is one of the few actively managed listed vehicles available to retail investors on the ASX, and in the event the proposed Scheme of Arrangement is approved by the shareholders of Platinum Asia Investments Limited ((PAI)), will be the only listed closed-end fund providing Asian
focused exposure.

Significant changes to the investment team responsible for the management of the RG8 portfolio, in particular the Lead Portfolio Manager, has seen changes to the exposure provided by the portfolio, with a larger number of stocks in the portfolio and a higher level of gearing with an increase to both the long and short exposure of the portfolio.

Investment in the Asian region has been difficult in recent years with the region materially underperforming the broader global market, which has been driven by a strong US market. This has resulted in limited demand for these strategies and contributed to the discount at which the Company has traded.

The Company has an aggressive share buy-back program in place which is designed to address the discount. While the buy-back program provides liquidity to those seeking to exit, meaningful improvement in the discount will likely be driven by the Company delivering attractive risk-adjusted returns in line with its objectives.

[See document attached (above) for more]

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