When I first started getting into investing, I read The Barefoot Investor and remember him mentioning Argo (ARG) as a simple way to get broad exposure to Aussie blue chips. I’ve followed it loosely ever since, just out of interest and do hold some in a Minor Trust.

Right now ARG is trading at a pretty chunky discount to its NTA of about 13%.

That got me thinking: could this discount be used as a yield play?

After all, the dividends are paid on the underlying portfolio (NTA), not the lower price you’re paying. So effectively you’re getting a higher yield on your cost base. With ARG currently yielding around 4%, buying at a 13% discount means you’d get:

4% ÷ 0.87 = 4.6% yield on your purchase price

That’s about 13–15% more income than if you bought all the underlying companies directly.

I initially thought this difference would compound into a big gap over 10–20 years, but when I ran the numbers it actually doesn’t make that much difference. It's only about 8–10% more total wealth after 15 years, assuming the discount and price stay the same.

So (unless I’ve messed up my maths which may be the case), it seems like buying stocks purely for a higher yield doesn’t actually move the needle much over long periods. Though in this case I have compared 4% to 4.6% which is perhaps not significant.

It’s been an interesting lesson and it made me rethink the idea of chasing higher yield as a strategy. The yield bump sounds exciting, but it might not be as powerful as it first seems?