Thanks, great history recap. Agree most LICs are in for a tough time with ETFs definitely more prevalent now.

And heaps cheaper too @Mujo - even the so-called "Smart" ETFs or "Active" ETFs - where there is some management discretion as to inclusions and weightings - tend to usually have MUCH cheaper fee structures than LICs and other traditional managed funds.

Graham Hand penned a decent article on the fall of LICs that was published in September in Morningstar's "FirstLinks" newsletter (used to be called "CuffeLinks" before Chris Cuffe sold it to Morningstar), see here: https://www.firstlinks.com.au/lics-closing-more-should-follow [20 Sept 2023]

Source: Bell Potter LIC Report, 1 September 2023

The table above identifies the discounts for many of the leading LICs. Some notable exceptions are Plato (ASX:PL8) and three of the Wilson funds (ASX:WAX, WAM and WMI), with the premium driven by a strong reputation for delivering income which encourages buyers to focus on the dividends rather than the premium, plus an ongoing commitment to marketing.

It’s a strange that people still choose to invest in Plato through PL8 at a premium of about 24% when their unlisted managed fund run with the same strategy is available at NTA (/NAV) and can be accessed easily via the ASX online mFund service.

Source: Excerpt from Firstlinks article by Graham Hand linked to above.

Another interesting table from that article:

Those are some funds which have (based on the Bell Potter numbers for 1 September 2023):

• A current large discount
• A five-year large average discount
• A range of high to low discounts over five years which are all negative

Graham says: The boards and management of these LICs need to justify to their investors why they believe in a future turnaround in the discount despite little evidence for at least five years. There are many more in a similar position. It’s not that the managers have weak governance, little marketing or even poor reputations, but how are they balancing their own desire for fees against the ability of investors to realise full value?

A small manager such as NAOS or Sandon needs the funds to run their business. Some managers argue that the LIC or LIT structure suits less liquid assets which cannot be sold easily to meet redemptions. Sebastian Evans at NAOS told Morningstar that he needs the committed capital of a LIC structure:

“If we converted to an active ETF and needed to liquidate our holdings it wouldn’t work. We have a 30% holding in a business. I can’t sell that in a day or two."

But there are plenty of unlisted property funds which manage liquidity by limiting redemptions at NTA to a certain amount or time period.

Larger managers with far more in their unlisted funds should consider whether the hassle of listing a small part of their business is worth it. When I sat on the board of Peter Morgan's 452 Capital, the operations people spent as much time on the small LIC as the rest of the much larger unlisted fund business.

--- end of excerpt ---

Graham ends his article with this:

Where do LICs stand now?

The development of active ETFs or ETMFs is relatively recent, opening the way for LICs to convert to listed open-ended versions, as well as unlisted funds, to close the discount. Managers with large discounts face disgruntled investors, activist competitors and the rising demand for ETFs.

Although discounts are historically wide at the moment, many of the large, traditional LICs have a record of drifting in and out of discount, and these can present opportunities for investors. There is a role for the right managers with the right LICs but it's time for many other managers to move on.

Footnote

In a fascinating development for the King of LICs, Geoff Wilson has announced plans for an open-ended version of WAM Leaders, looking to raise $500 million to $1 billion. It will be his first move away from closed-end LICs since his initial fund about 25 years ago. 

Then on 12 October 2023, Forager (ASX:FOR) announced:

"The Manager considers that the LIT structure served this purpose well through several market cycles in the subsequent seven years. In the past four years, FOR’s units have been trading at a meaningful discount to the underlying NAV. FOR has implemented a number of initiatives in an effort to address this gap, including a semi-annual distribution policy and undertaking a regular buyback.

Whilst there have been some periods of improved trading since those actions commenced, it has not been sustained and FOR’s units have recently been trading at an average discount of more than 15% to NAV.

It is the Manager’s view that investor apathy towards closed-ended investment vehicles has become entrenched and that smaller, less liquid vehicles like FOR are unlikely to trade at NAV for the foreseeable future. The Manager’s current view is that the magnitude and sustained nature of the discount to NAV now outweighs the portfolio management benefits of remaining a closed-ended fund.

The Manager has considered a range of additional measures to further improve the traded market price of FOR units. The Manager currently considers that the solution which will be in the best interests of FOR unitholders is likely to be the orderly transition of FOR back to an open-ended fund."

Graham Hand is Editor-At-Large for Firstlinks. This article is general information and does not consider the circumstances of any investor. Graham holds some of the securities mentioned in this article and was on the Board of Absolute Equity Performance Fund until two years before its delisting.

--- end of excerpt ---

Worth a Read: Why LICs are closing and more should follow (firstlinks.com.au)

I think dividends are key as you pointed out for trading above NTA. It’s mostly retirees looking for income that invest in the space - and are used to the ARG and AFIs of the space as the diversified vehicles from yesteryear.

The monthly income over the quarterly income is the only think you could possibly make for holding PL8 over the managed fund, but the ridiculous premium makes that moot.

I believe it’s a worldwide trend with the big discounts - like Bill Ackmans vehicle too.

Definetly agree, there’ll be more to follow that convert, they have little reason not too and will sooner or later be targeted by an activist otherwise.

Agreed @Mujo Dividends are the main driver for NTA premiums in the LIC space. The reason why those 3 LICs that WAM Funds manages have maintained such healthy premiums in their respective SPs is that they increased their dividends steadily for years and then when they couldn't keep doing that - in the case of WAM Capital (WAM.asx), they instead maintained the dividend and ran down their profit reserve, so self-funded retirees and other loyal shareholders who relied on that income remained comfortable with the income aspect of the LIC, despite the falling share price due to falling NTA. Those buying at those premium prices were buying to lock in the income stream. My observation however is that WAM Capital (WAM) has bugger all in their PR now, WAX has run out of franking credits, and WMI have to generate more profits than the other two because the microcaps they invest in do not tend to pay high fully franked dividends to them.

Microcaps are more often reinvesting most if not all of their profits (when they are actually profitable) back into their own growth - rather than distributing those profits to their shareholders like more mature companies tend to do. This means that the profit reserve (PR) of WMI (WAM Microcap) has to be topped up mostly from trading profits and the franking credits have to be generated mostly by tax paid by WMI on those trading profits.

Oscar Oberg, the lead PM (portfolio manager) of WMI (and WAX and WAM and WAA) has done a really good job with WMI to date and they have managed to pay an increasing stream of fully franked dividends, except for the final dividend in 2022 which had to be rebased to a lower level, as shown below.

The dive in early 2020 was that Covid crash that affected everybody. Other than that, you can see that their SP was rising strongly through until around March 2021 where it was moving more sideways as their NTA began to fall. The WMI SP went into a downtrend in 2022 which continues today, and my view is that much of that change of sentiment was prompted by that reduction in the full year dividend in 2022, something that was foreshadowed in their shareholder communications (monthly reports) during the first half of the 2022 calendar year. The downtrend moderated in 2023 - or became less steep - as they started to gradually raise those dividends again.

Obviously their NTA movement from month to month also plays a big part, but I do think that many of the investors in these funds are more focused on the income generated by the fund than the actual underlying asset value.

The big advantage of WMI over WAM and WAX is that WMI still has a healthy profit reserve with franking credits. WAM has very little in their PR and while WAX has multiple years worth of dividends in their PR, they recently ran out of franking credits, so their last div was only 60% franked. I do note however that the premium in the share price of all three of those LICs has been reducing over the past 6 months. And there's good reason for that. I think that premium reduction continues from here, unless the funds can start performing really well and building up their respective profit reserves, which will allow them to raise their dividends.

Note: Most of the posts in this particular forum thread below this one are going to be at least 2 years old, and some of them are replying to posts that have been removed by the system because the members who posted them are no longer members of Strawman.com (or else they are no longer Premium members), so there's some context. The stuff above this post is from the past few days but below this post - in this thread - not so much...

@Bear77 it seems that Oscar and the WAM team are aware of the potential outflow risk and are trying to bump up the profit reserve for WAM. The profit reserve has now increased to 11.2c from 6.5c. This is still not enough to cover a full year of dividends, but at least gives them some breathing room to make the next payment without having to cut from 7.75c

November

December

I still agree with general sentiment that the NTA premium will continue to diminish and potentially switch to a discount, but in my mind this helps maintain sentiment for a bit longer.

Good pickup there @Bradbury - and this appears to be WAM Capital's MO - to just scrape by in this way without reducing the dividend, but I wonder if that means selling down positions which they are in the green on to generate profits when they would otherwise have preferred to let those winners run. So what I am suggesting is that with such a low PR, perhaps they are becoming forced sellers at times just to generate the profits that they need to maintain their dividends. If that is the case, it could be a contributing factor to their underperformance over recent years as demonstrated by their reducing NTA.

Industry norm is around 1% + 20% of out perfromance subject to a high water mark (which I think is still too much). NAOS on the two smaller funds charge 1.75% off gross assets + 20%. Meaning they charge fees the debt they issued which is absolute garbage. As an investor you'd end up paying over 2% of NTA p.a just for them to run it and that's before the other expenses they would incur in the ordinary course of business as well as perfromance fees.

Hey OUTSIDEcapital, 

You say you like the concentration, which I agree with. NCC seem to average around 10 large holdings in Illiquid names of which you can pretty much find all of them.

If it were me and even If I liked them there is no way I would ever buy this fund. I would just replicate their fund and buy the stocks directly. This would take less than an hour to figure out and would be surprising low maitanence. Paying no fees would see you with a significantly better return. Of course you won't replicate it perfectly but it would be close enough and whatever downside there is from that would be more than compensated by the advantages, which are if one of the stocks has a serious issue as an individual there is enough liquidity for you to get out where as NAOS is stuck in there in the lobster pot.

Hey Perigine, last time I checked NAC charged 1.75% but NSC was 1.15%.

Good advice Arrow trades and yes sorry you are right. Still crap IMO, the MER is still obscenely high for all of the funds, especially NAC.

Yes sorry Outside, the only fund that charges 1.75% is NAC.

The funds also pay CGT on their gains and don't get a discount either. This means you end up paying more tax longrun unless you have a 0% tax rate so that part doesn't add up to me.

The rest I can agree with. Nonetheless I stand by NAOS' funds being of poor quality for reasons previously highlighted and to be avoided unless you have a thesis where a liquidity event or major capital management inititative will happen.

Not trying to talk anyone out of any existing positions because if an investment is working for you and suits your needs and circumstances then that's a good thing.  However, I believe that anything over a 1% management fee is excessive, and I'm not a fan of performance fees when they come on top of management fees.  I believe the future of managed funds is the performance-fee-only type that is being advanced by Tony Hansen of EGP Capital, who was mentioned by Gerard Dyson of Spectur in our August meeting as being a supporter of Spectur and Tony has provided a line of credit to SP3 that they have not used yet, however it's there as a source of low cost funding should they need it.  Tony's Concentrated Value Fund (CVF) charges zero management fees, and only a performance fee, so when he does not provide a superior return to his benchmark, you pay no fees at all.  This is a concept that Tony is very passionate about and I believe that is going to be the future of boutique funds management.  It will not suit the big funds management players, but there will eventually be enough fund managers using Tony's model that people are going to have a real choice.

Another model I like is the one adopted by FGX and FGG where they charge a 1% management fee and zero performance fees, and they then donate that 1% to charities, because everybody involved in FGX and FGG, including all of the fund managers who manage the funds, the ASX, the brokers, all of them provide their services for free to those two funds.  Again, that won't work for most fund managers, but it's an option that's available now.

Getting back to NAOS, whether it's 1.25% or 1.75%, it's high, and when combined with a performance fee of 15% or more, it's one of the more expensive fee structures out there.  If they outperform their benchmarks AFTER all fees and charges, then I don't have trouble with high fees, because they're still adding value, but if you look at their history, as PC has pointed out, they have not performed very well, and NSC's performance in particular has been dismal.  

Other things to look out for are very low benchmarks.  There are other funds out there (not NAOS) who have benchmarks like the bank cash swap rate - basically the cash rate, so they are trying to outperform leaving your money in the bank, which is a bar so low as to be laughable.  The benchmark index that each fund uses is important, and should be suitable for the type of fund that they are - i.e. the types of investments they usually make within their fund, so a microcap fund should not be benchmarked against the ASX200 for instance, it should be benchmarked against the Small Ords Index.  That sort of thing.  Anyway, I have a 9am appointment, so have to go now - I may add more here later.

Hi Bear, 

Good idea to make a forum for this topic.

In reference to the performance of the NAOS funds, it's worth noting how they report these figures, taken straight from their reports below:

Investment portfolio performance is post all operating expenses, before fees, interest, taxes, initial IPO commissions and all subsequent capital raising costs. Performance has not been grossed up for franking credits received by shareholders. 

Given they charge 1.75% of gross assets PLUS perfromance of 20% of outperfromance these figures are very misleading. Not to mention the impact of options and convertible preference shares..

For instance NAC was floated at $1.00 in around December 2014.

Since floating it has paid $0.317 per share in fully franked dividends. It's current shareprice was around $1.20 at the end of July.

Gross the dividends up for franking credits and I get total dividends of $0.453 per share

Add the two above and you get $1.653 per share which is a 65.3% cumulative return which is actually below their benchmark.

Even if you assumed intrinsic value of the fund was the Fully diluted Pre Tax NTA of $1.30 you only get perfromance of 75.3% which very narrowly beats its benchmark. Haven't run the numbers on NCC but I think it's outperfromance is also eroded once you do the math and NSC speaks for itself.

Outside capital - I'm not a fan of Wilson's funds but he does know how to make money and keep shareholders onside. WMA is good value at current prices regardless of what you think of the manager (there is margin for error).

If there is one I hate it is reporting performance on a pre fees basis, which both Wilson and NAOS do.

My favourites are FGX and FGG which have decent performance and at least donate fees to charity.

I feel LICs can be superior to passive ETFs in many cases as they provide active management which can certainly add value, as do active ETFs or other active funds - such as FEMX - the Fidelity Global Emerging Markets Fund.  Sometimes LICs do not manage to beat their own benchmark index, such as PAI for many years and EAI in recent years where you would probably have been better off investing instead in their benchmark, the MSCI All Country Asia ex-Japan Net Index.  You need to see evidence that the active management has provided superior returns, AFTER fees.  Of course the fee structure is important, but in my opinion what is even more important is the net returns after fees.

LICs do provide some other advantages/disadvantages  over ETFs and other managed funds.

1. LICs and LITs (Listed Investment Companies and Listed Investment Trusts) are Closed End Funds (CEFs), meaning that there is a fixed pool of capital, and to buy units (shares in the case of LICs), an existing owner needs to sell theirs to you.  They do not create additional units on demand like an ETF does, or a standard managed fund.  CEFs can therefore trade above or below their NTA (net tangible assets), a.k.a. NAV (net asset value), sometimes substantially above or below, like over 10%, and sometimes as much as 30% to 40%.  This is due to demand versus limited supply.  If the LIC is not well liked and sentiment is poor, they will often trade at a discount to their NTA, and that also applies to classes of LICs.  For instance, currently, globally focussed LICs - that is LICs that are ASX-listed but invest in shares traded on exchanges globally rather than ASX-listed companies - have almost all been trading at significant discounts to their respective NTAs.  This is not uncommon.  Also, niche LICs, such as those who focus on miners, or microcap companies, or a particular sector that is not currently "in vogue", will usually trade at a NTA-discount.  There are exceptions, and WGB (WAM Global) and WMI (WAM Microcap) are two that often buck the trend and trade at premiums to their NTAs.  However, the fact that these LICs can trade away from the value of their underlying assets (their NTA) can provide opportunities that are not available with ETFs and other managed funds. Regarding the fixed pool of capital, they can increase the size of that pool, usually by acquiring other LICs/funds, or by doing SPPs (share purchase plans), Rights Issues (RIs), a.k.a. Entitlement Offers (EOs), issuing options and having those options exercised, having a DRP (dividend/distribution reinvestment plan), and/or underwriting their dividends/distributions.  However, in the absence of that type of activity, the number of shares on issue for a LIC will usually stay exactly the same, which is what creates the SP-to-NTA variance (due to varying demand).
2. LICs have the ability to establish and build up a "dividend profit reserve", often referred to as a profit reserve or a dividend reserve.  This allows LICs to "smooth" their dividends from year to year.  For example, in years where they do not make much of a profit or actually lose money, they can still maintain dividend payments due to the money they have sitting in that dividend/profit reserve.  The flip side is that during years when they do shoot the lights out, they will NOT pay all of their profits out to shareholders, but instead use some of those profits to build up that reserve in preparation for future leaner years.  This enables many LICs to provide a fairly steady stream of dividends to their shareholders, which is often a key feature of the LIC sector.  It then becomes obvious why it's usually a good idea to keep an eye on their reserves so that you can remain confident that they CAN maintain their current dividends and hopefully raise them over time.  This was a concern I had over WAM Capital (WAM), Wilson's flagship fund, which ran their profit reserve very low in 2019 and 2020, but have started building it up again now.  It certainly looked like were going to have to start reducing their dividends there because they didn't have enough for the next one, but they scraped through.  I like to invest in LICs that have decent profit reserves, are trading at an NTA-discount, are invested in companies I am comfortable having exposure to, and have management (particularly their PMs - portfolio managers) who have demonstrated track records of outperformance and good positive total shareholder returns - after fees.  It's also why I am wary of LICs that do NOT provide details of their reserves to their shareholders - particularly those who have had a period of underperformance where it is likely that they have not added much to their reserve(s) - those are companies where it's fair to be concerned about the sustainability of their dividends.  I should also note that LITs (trusts) are usually bound to distribute ALL of their profits to shareholders EVERY year, and so do not usually have the ability to use dividend/profit reserves to smooth their dividends, however there are a few LITs, notably those run by Magellan (MFG) who have found ways of getting around those rules.  LICs on the other hand are companies (not trusts) and therefore have no such rules - and can distribute profits as they please.

So that, in a nutshell, is why I have been attracted to the LIC sector for almost as long as I have been involved with shares (a few decades now), but I got REALLY interested in LICs when I had to set up a portfolio for some relatives about 15 years ago that was designed to provide not only capital growth but a steady and reliable income stream from dividends and distributions.  I was initially attracted to the big 3 - AFI (Australian Foundation Investment Company, or AFIC), ARG (Argo Investments) and MLT (Milton Corporation).  They did the job for a few years for me, however I then started to focus on buying LICs at discounts and why some traded at huge premiums, particularly WAM (WAM Capital) and WAX (WAM Research).  I then realised how much the big 3 (AFI, ARG & MLT) tended to hug the ASX100 index, particularly the ASX50, and how similar their top 20 were, particularly the top positions of ARG & AFI.  I then realised that Rob Millner's influence on MLT was reflected in their larger than everybody else positions in SOL and BKW, which was not necessarily a good thing unless you were bullish on SOL & BKW, in which case why not hold them directly?  I was attracted to the higher dividends that Geoff Wilson was paying with WAM and WAX, and managed to buy both at reasonable premiums instead of rediculous premiums to NTA.  I then started following him closely, attending all of his Roadshows, and participating in each of his IPOs, including when he launched FGX and FGG, so I held those two, plus WAM, WAX, WMI, WLE and WGB at various times - on and off - and I also held BAF (the Blue Sky Alternatives Access Fund) before Wilson (WAM Funds) took over as their fund manager and they were renamed WMA (WAM Alternative Assets), and I then took profits and sold out.  I do not currently hold any of Wilson's (WAM Funds') LICs.  I did not participate in the IPO of WAR.

WAR is a strategy that Geoff has been pursuing for many years, using WAA (WAM Active) and WAM (WAM Capital), and frankly the results of that strategy have been very mixed, and in recent years have provided a drag on the performance of both of those LICs.  This is evidenced by the outperformance of WAX, which contains none of the WAR-type discount-capture opportunities in LICs, compared to WAA and WAM.  I won't go into it any further here other than to suggest people who are interested have a look at the relative share price graphs and dividend histories of those three LICs (WAX, WAA & WAM) over the past 5 years.  It is clear that WAX provided far superior total shareholder returns on the back of their investment portfolio performing much better.  

Now that WAA and WAM do NOT hold LICs, and WAR hold all of the LICs that WAA and WAM previously held (AUI, NSC, PIA, TGG, etc.), we shall see if the performance of WAA and WAM improve from here - compared to the past 4 to 5 years - I expect WAA and WAM's respective performances to improve without those LICs that they were previously holding.

I'm not saying that the strategy is flawed, I'm just saying it had very mixed results prior to the creation of WAM Strategic Value (WAR).  What has changed is that there is now a lot more market focus on what WAR is doing, and their strategy, and people are following WAR into these LICs expecting a share price increase and getting it, mostly because of people like themselves following WAR into those LICs, a sort-of self-fulfilling prophecy if you like.

GVF (the Global Value Fund) is a fund that has been doing this on a global scale for a number of years now, and it has Geoff Wilson as a board director.  GVF don't generally get involved in ASX-listed CEFs, but they made an exception for BAF, and GVF's Miles Staude ended up as a director of BAF for a while (until WAM Funds took over as managers of the fund) as a result of GVF's large position in BAF.  Of course, Miles and Geoff are mates as well as collegues, and Geoff's company now manages BAF, now renamed as WAM Alternative Assets (WMA). 

The market has also seen the recent announcement that TGG (the Templeton Global Growth fund, which has actually been a value fund, not a growth fund) have agreed to allow Geoff's WAM Funds to takeover the management of TGG via a merger of TGG and WGB (WAM Global).  This comes on the back of a number of mergers and acquisitions by WAM Funds over the past few years, including CYA (Century Australia Investments, merged with WLE - WAM Leaders - in March 2019), and CLF (Concentrated Leaders Fund, taken over by WAM in April this year).  There have been other takeover attempts by WAM Funds that have not gone through, but have nonetheless provided superior outcomes for shareholders in those companies than what they were looking at before Geoff's companies got involved. 

What we are seeing now is that a lot of these large discounts-to-NTA are closing, as either WAR gets involved or else there is speculation that WAR may well get involved, due to the large discount, so people buy in anticipation of that which helps close the gap and reduce the discount.  There is also the aspect that a lot of PMs and boards are trying to close the discounts (the large gaps between their NTAs and SPs) and to communicate some solid plans to achieve this to their respective shareholders, because if they don't, they are very likely to end up being targeted by WAR, and they know it.  

So my view is that there will likely be a strong sugar-hit in terms of up-front positive results for WAR as they embark on this strategy at scale, so I expect they'll certainly perform well in the first few months since IPO.  Remember - they've only been a listed company for 1.5 months - around 7 weeks so far.  They IPOd at the end of June 2021.  However, they will soon run out of targets with such juicy discounts (-to-NTA in their share prices), and we're already seeing these NTA discounts narrow across the LIC spectrum here in Australia.  In short, I believe the more successful they are initially, the harder it is going to be to maintain that sort of success rate - and performance.  They will soon become victims of their own success, having scared the cr@p out of the boards and management teams of underperforming LICs - who stand to lose their own jobs if WAR ultimately takes them over or has their board rolled, which is a tactic that Geoff Wilson has certainly employed in the past.  I think it could be a good period in the next little while for LICs as a sector, particularly those who have underperformed the most in recent years, but having followed GVF for a number of years - who are doing exactly what WAR is doing on a global scale - I think the returns are going to be lumpy for WAR itself, after that initial sugar hit where they do very well for the first few months. 

To give you an idea of what I think may happen, have a look at WAR's share price graph.  IPO'd at $1.25 at the end of June, shot up to $1.36 during the first week of July, and have been mostly falling since July 5th, to now be trading at $1.28 to $1.30/share, very close to their $1.29/share July 31st NTA.  I think there will be the odd spike up, followed by weeks of South-East movement.  A lot will depend on their dividend yield, however I feel that they are likely to start off paying low dividends and trying to build a profit reserve, as they have done with their other LICs, and then try to gradually increase those dividends over subsequent years once they have a decent amount in that profit reserve.  This might not suit many of the investors who have jumped on WAR, and there may be some selling pressure once people realise that there are unlikely to be a number of big dividends or capital returns on the back of regular big wins.  I think WAR will be a decent investment over 5 to 10 years, but certainly not one of the best opportunities available to me, which is why I'm not invested in WAR.  It's a good idea, but not one of the best available.

Some people have commented to me that they think that Geoff might be spreading himself a bit thin lately, or might be milking his loyal shareholder base a little too much, now with 8 (eight) LICs under management (WAM, WLE, WGB, WMI, WMA, WAR, WAX & WAA), and that's a fair point (or two), but Geoff is relatively hands-off now with all of those LICs except WAR - which is his baby.  He has dedicated lead portfolio managers backed up by capable teams running the other 7 LICs, and he leaves the day-to-day running and investment decisions up to them mostly for those LICs. 

I was interested to see what sort of changes we would see when Chris Stott left WAM Funds to start up his own funds management company, 1851 Capital, but we haven't seen too much in the way of changes - not that I could detect anyway.  Stotty was the CIO (Chief Investment Officer) at WAM Funds, and ran a tight ship, with particular emphasis on adhering to their investment rules, particularly around selling out of companies very promptly when they identified they'd made a mistake (their investment thesis was impaired or broken) and only buying into companies when at least one positive upcoming catalyst had been identified that should theoretically provide a positive market re-rating of the company.  I didn't really see much of a change when he left to be honest. 

There was a bigger change when Martin Hickson also left WAM Funds (in September 2019) to go and work with Chris Stott at 1851 Capital - they had both worked at Challenger (CGF) prior to working for WAM Funds.  At WAM Funds, Martin had been the PM of WAA and co-PM (co-portfolio-manager) of WAM (the big flagship fund that holds everything that WAX and WAA hold except in larger quantities because WAM is a much larger fund than both WAA and WAX) and also the co-PM of WMI.  After Martin left after almost 10 years at WAM Funds, Oscar Oberg became the lead-PM of WAX, WAM, WAA and WMI, so Oscar is in charge of half (4) of the 8 LICs that WAM Funds currently manages.  WAA performed poorly during that period, and so did WAM, but WAX and WMI both did brilliantly most of the time.  My thoughts on that are that Oscar is far better suited to research-driven investment, rather than the market-driven style of Martin Hickson.  Remember that WAA is 100% market-driven, WAX is 100% research driven.  WMI and WAM are both a mix of the two investment strategies, but WMI is more research driven clearly than market-driven.  Prior to Martin leaving, Oscar was only responsible for research-driven investments, because Martin was responsible for all of the market-driven investments, the arbitrage opportunities, the momentum plays, the quick in-and-out plays, the M&A plays, the discount-capture strategies - except for the LICs discount capture - investing in other LICs - that was all Geoff.  Oscar only had to worry about investments based on fundamental analysis - research.  But when Martin left, Oscar took on all of the stuff that Martin had previously done, and didn't do so well at it, however he kept performing well at the research-driven stuff that he had always been good at.  Which bring me to key personnel risk.

• WAM, WAX, WMI: If Oscar Oberg left, I think that would be a reason to rethink involvement in WAX, WAM and WMI, if I had any (I currently do not).
• WLE: If Matt Haupt left, I think that would seriously reduced the positive outlook for WLE.
• WGB: If Catriona Burns left, and I held WGB shares, I would likely sell out, because she is very good.
• WMA: I don't have a sense of how good Dania Zinurova is, so not sure how her moving on would affect WMA - she hasn't been there long enough to establish a track record IMO.
• WAA: I'm not interested in WAA.
• WAR: If something serious happened to Geoff Wilson, I think that would severely reduce the effectiveness and success of his strategy with WAR.  WAM Strategic Value all hinges on Geoff and his execution, as well as his track record of activism, such as seeking to have underperforming LIC boards removed and replaced, and making takeover bids for underperforming LICs, which is scaring the management and boards of a number of underperforming LICs I reckon at this point.

Probably enough from me about WAM Funds at this point - I do not currently hold any of them, but have been involved with most of them over the years (except WAR clearly).

MattB, I'm a fan of both types of fasting, but on this occasion it was intentional and intermittent. 

Good points made there PC, I also was not a fan when WAM Funds changed to presenting their results pre-fees some years ago, and then started listing their top positions in alphabetical order more recently instead of in order of weighting within the portfolio.  I think they were aware of people trying to copy their portfolios, but that would only help lift the share prices of their investee companies - but I guess the alphabetical order thing gives them a little more mystery and perhaps causes more people to invest in companies that are only their 19th or 20th largest positions - coz we don't know the order.  

OC - I haven't looked at BTI in any detail recently, so I'll decline to comment on them.  

PC - FGX and FGG are also favourites of mine, although I'm not currently invested in them.  I usually am invested in one or both.  I love the concept and the amount they've donated to those charities to date already is very impressive.  Edit:  Correction:  FGX is in a small portfolio I run for my 2 children.

Just to update this - most of these posts above in this forum thread are at least 2 years old, and I no longer hold FGX or any other LIC or LIT, as I have more recently disclosed. My thoughts on the advantages of LICs have also evolved somewhat - and I'm no longer a fan, hence choosing to get out of them altogether. I now watch the space with interest, but I'm not directly invested in it. That could always change in the future should an opportunity with enough potential upside come into view.