Monthly Listed Investment Trust Report – Jul 2025

This story features WAM INCOME MAXIMISER LIMITED, and other companies. For more info SHARE ANALYSIS: WMX

Download related file: IIR-LMI-Monthly-Update_7-July-2025

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 attached.

WAM Income Maximiser Limited ((WMX))
We have initiated coverage on WMX, which listed on 30 April 2025. WMX raised $150.2 million through the issue of 100.1 million shares at $1.50 per share.

The Company provides exposure to a multi-asset portfolio providing exposure to a combination of equity and debt securities with a “balanced” asset allocation. The core asset allocation is expected to be 60%-70% equities and 30%-40% debt, however, the allocation between the asset classes will be dynamic and at the discretion of the Manager based on the outputs from the investment process.

The equity component will be invested in what the Manager has determined to be high quality stocks from within the S&P/ASX300 Index and the debt component will
be invested in investment grade corporate bonds and notes, hybrids and short-term money market instruments.

The Manager can invest in government bonds at its discretion, however investment grade corporate bonds and notes and hybrids are expected to be the core investments.

The portfolio is designed to provide a regular income stream and capital growth over the long-term. The Company seeks to provide a monthly income stream in the form of fully franked dividends with a target grossed up income return of RBA Cash Rate + 2.5%p.a. The target income return will have reference to the NTA, not the share price.

The Company will be seeking to be in a position to commence dividends in August 2025, subject to the portfolio performance and sufficient income being generated over that time, being three months after the IPO. The portfolio is managed by Wilson Asset Management (International) Pty Ltd (the “Manager”), which is 100% owned by Geoff Wilson and forms part of the Wilson Asset Management Group.

The Company has entered into a Manager Loan with the Investment Manager to cover the costs of the Offer. The loan is for a term of 36 months from the date of the allotment of shares and must be repaid in full regardless of whether the Manager is the Manager of the Company.

The product is suitable for those investors seeking exposure to an above market yield with a regular monthly income stream. The exposure to a combination of equity and debt provides investors exposure to a combination of income and capital growth with the blend expected to deliver the returns with lower volatility than a 100% allocation to equities.

Given the target income return, we view the Company to be suited to those investors that can derive the full benefit from the expected fully franked dividends with other vehicles and investment options preferred for those that don’t derive the full benefit of fully franked dividends.

Based on the current RBA Cash Rate, the target income return provides an above market fully franked yield. However, we note that there may be periods where other asset classes, such as equities provide a more attractive yield.

The Company offers a differentiated investment offering to other ASX listed managed investment vehicles with the potential to provide diversification to an investors broader portfolio and deliver the benefits of a defensive allocation during periods of heightened market volatility.

IIR has assigned WMX a Recommended rating. The Company provides investors a differentiated investment approach to the income focused strategies currently available on the ASX. The combination of equity and debt is designed to provide income and potential for capital growth with a lower level of volatility than the broader domestic market, providing downside protection in uncertain market environments.

While this will be the first strategy in the Manager’s stable that incorporates debt, the Company will be focused on higher grade corporate debt which reduces the risk profile associated with the debt component with the ability to invest in synthetics and higher risk debt securities expected to be no more than 5% of the debt portfolio.

The Manager has deployed capital quicker than was initially anticipated with market volatility providing the opportunity for the Manager to deploy capital for the debt component of the portfolio in attractive opportunities with the portfolio now fully deployed.

WAM Leaders Limited ((WLE))
WLE provides exposure to an actively managed portfolio of large cap stocks (stocks from within the S&P/ASX 200 Index). The Company now has over nine years of performance history with the Company listing in May 2016. The portfolio is managed by MAM Pty Limited (the “Manager”), which forms part of the Wilson Asset Management Group.

The Company has three primary objectives: (1) provide capital growth over the medium-to-long term; (2) provide a stream of fully franked dividends, subject to sufficient profit reserves and franking credits; and (3) preserve capital. The Company seeks to achieve this through an actively managed portfolio that comprises predominantly long positions in stocks in the S&P/ASX200 Index and cash.

The Manager can take short positions up to 50% of the portfolio value, however shorting is not expected to be a material part of the portfolio. The portfolio is diversified with the portfolio typically comprising around 50-80 stocks, however the Manager may hold more stocks with the Manager utilising diversification as a lever for risk management during periods of heightened uncertainty. The Manager can hold cash in the event attractive investment opportunities cannot be identified. The Manager will typically hold no more than 10% cash given the liquidity of the portfolio and the preference to remain invested.

The Manager will only revert to cash if there is a compelling reason to preserve capital.

The portfolio is managed in a highly active manner with an average annual portfolio turnover in excess of 400%. The high level of turnover is a function of the investment process which incorporates both top-down and bottom-up analysis. While the macro and sentiment analysis plays a part in the construction of the portfolio, the strategy is a value strategy at its core with the Manager potentially investing in value opportunities irrespective of the macro and sentiment analysis.

WLE is suitable for those investors seeking access to an actively managed portfolio of large cap (ASX 200) stocks with the benefit of a fully franked semi-annual dividend. An investment in the Company is appropriate for those seeking access to a portfolio that has the potential to outperform the market through active management with a differentiated portfolio to the domestic market. Despite the differentiated nature of the portfolio, the NTA has exhibited a moderately low tracking error historically with the tracking error declining during periods of increased portfolio diversification.

Given the capital preservation focus of the Company, WLE is suitable for those seeking access to a portfolio with lower volatility than the market. We note that while the portfolio may deliver lower volatility than the market this may not be case for the shareholder returns with the potential for dislocation between the NTA and share price. IIR has maintained a Recommended rating for WLE.

WLE’s performance has been mixed with periods of strong performance and periods of weak performance. While the Company has delivered on its objective of capital growth over the medium-to-long term and a stream of fully franked dividends, recent performance has resulted in the Company underperforming the benchmark index since inception and the portfolio has not delivered capital preservation in down markets in recent periods.

The relative underperformance was driven by a few stock positions with the Manager employing more scrutiny with respect to position sizing and the investment thesis for companies that are experiencing governance and regulatory issues as a result of the outcomes of some of the high conviction positions that have been a drag on performance. The Company provides a differentiated investment mandate to many of the LICs with a focus on domestic large cap stocks with mandate providing the potential to deliver outperformance of the market, which we have seen at times throughout the history of the Company.

We believe the strategy has performed its best when the portfolio positioning is driven by macro and sentiment factors with the investments that have diverged from the macro and sentiment factors/trends identified being a drag on performance.

However, we note that while the Manager will use macro and sentiment trends and inflection points in its analysis, the Manager is a fundamental, bottom-up investor. We view the recent addition of Damien Boey to the team as a positive given his asset allocation expertise and macroeconomic credentials. While currently still at healthy levels, we will be keeping an eye on the level of dividend coverage with the level of dividend coverage declining over the last two years with the capital growth not covering the increase in the annual dividend.

With an elevated yield currently being paid, the Board will need to ensure the dividends do not increase to a level that compromises capital growth for investors.

For more: see document attached.

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.

INDEPENDENCE OF RESEARCH ANALYSTS

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.

INDEPENDENCE ACTIVITIES OF ANALYSTS

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.

INDUCEMENTS AND INAPPROPRIATE INFLUENCES

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.

DISCLAIMER

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.

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