Listed Investment Trusts (LITs): The Recovery Continues

About the author:

Parveer Bassi
Author name:
By Parveer Bassi
Job title:
Transaction Analyst, Fixed Interest
Date posted:
16 February 2021, 5:00 PM

  • The prices of the LIT sector have recovered strongly from the oversold levels seen last year in mid-March. MXT is now trading at a consistent premium to its Net Tangible Asset (NTA) with GCI and PCI following close behind as the discounts on all LITs have narrowed significantly.
  • While some securities continue to trade at modest discounts to their respective NTA values, it is pleasing to see that NBI’s NTA now sits above the $2.00 issue price, as do those of MXT and GCI.
  • The LIT sector has provided investors with a consistent and stable flow of distributions and remains an attractive income opportunity to further diversify portfolios.
  • With GCI’s NTA value remaining stable and the NTAs of NBI and KKC closing in on their issue prices but still trading at discounts we retain Add ratings on these LITs which currently represent excellent value offering attractive yields.

NTAs have recovered back to their initial issue prices

Equity and credit markets were severely impacted by the COVID-19 pandemic in 2020. Risk sentiment deteriorated during the month of March as fears over the potential impact on financial markets mounted leading to a large sell-off in global markets. The sell-off across asset classes was accentuated as open-ended global fund managers became forced sellers of investments at distressed prices to fund investor redemptions causing substantial price dislocation.

This price dislocation impacted the market price of the underlying assets of the global LIT managers: KKR, Neuberger Berman (NB) and Partners Group. NTAs fell ~30% due to mark-to-market losses (but importantly not realised losses). The ASX prices of LITs fell dramatically with investors selling units at lower prices to gain liquidity in an uncertain market leading to large discounts to NTA values as shown in Figure 1.

New website images

Find out more

Download full research note

To find out more information, please contact the Fixed Interest Team.

Request a call  Find local branch

Need access to our research?

You are also welcome to start a two-week trial of our online platform, which provides access to detailed market analysis and insights, provided by our award-winning research team

Create trial account 

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

  • Print this page
  • Copy Link