26-May-2019: In a recent wire for Livewire - see here - Marcus Padley argues that it's time to get back into Australian Banks. One of the simplest ways to get exposure to the 5 largest banks in our market (including MQG) - is via one of our largest three LICs - and the two with the biggest exposure to the banking sector are likely to be MLT and ARG.
At April 30, Argo had Macquarie (MQG) as their #1 holding (largest position), with Westpac very close behind at #2. ANZ were ARG's fourth largest position, CBA were #5, and NAB were #9. Together those 5 positions represented 22.5% of Argo's entire portfolio at April 30th.
Argo are Australia's 2nd largest LIC, behind AFIC (AFI) who had 21.4% of their portfolio in the same 5 banks at April 30th (and once again those 5 positions were all within their top 10 holdings).
However, the largest bank sector exposure can be achieved via owning shares in Australia's third largest LIC, Milton Corporation (MLT) who also had those 5 banks in their top 10 and said in their April report that the bank sector was 27.4% of their portfolio. MLT also had 8.3% of their portfolio in "Other Financials" which includes fund managers such as Perpetual - PPT.
If you agree with Marcus, and think that the outlook is looking a little less risky for our banking sector going forwards (he's not so bullish on capital gains but he thinks the income component of investing in the banks looks a lot more solid now, especially since the Coalition retained Government Federally last weekend), then having some exposure to one or more of our big three LICs is certainly one way to gain immediate exposure to that theme. Of the three, it looks like MLT has the highest exposure to the Australian Banking sector, and ARG has the second largest exposure.