Summary
The LICAT sector presents a compelling income story this week, with nine funds delivering yields between 2-9% while most trade below their underlying asset values.
Market Standouts
MCP Income Opportunities Trust (MOT) leads the pack with a 9% yield, though investors are paying just 91 cents for every dollar of assets. This 9% discount suggests the market has concerns, but the strong daily turnover of $397,000 shows there’s genuine interest from both buyers and sellers. At the other end, Perpetual Credit Income Trust (PCI) is the only fund commanding a significant premium – trading 10% above its asset value. Investors are clearly backing management here, accepting lower value to access what they see as superior execution.
Value Hunters Take Note
Glennon Small Companies (GC1) screams value trap or genuine opportunity at a 32% discount. Trading at just 54 cents while holding 79 cents of assets per share, it’s either a bargain or there are serious underlying issues. The light trading volume of $31,000 daily means getting in or out won’t be easy. Acorn Capital (ACQ) offers a more liquid alternative for discount hunters, trading 17% below assets with decent turnover of $56,000 daily and a solid 7% yield.
The Steady Performers
MCP Master Trust (MXT) dominates by size with $2.4 billion in market cap and proves big can still deliver, offering 8% yield while trading almost at fair value (just 2% discount). Its $1.1 million daily turnover makes it the most liquid option for larger investors. KKR Credit Income Fund (KKC) delivers a strong 8% yield with excellent liquidity at $431,000 daily turnover, trading at only a modest 3% discount to NTA. Qualitas Real Estate Income Fund (QRI) rounds out the quality trio with an 8% yield and trading almost precisely at its asset value.
The Bottom Line
Most LICATs are offering income yields well above cash rates while trading at discounts to their underlying assets. This combination typically emerges when investors lose faith in closed-end structures or when broader market uncertainty creates opportunities for patient capital.
For income seekers, MOT’s 9% yield looks attractive despite the discount concerns. Value investors should dig deeper into GC1’s 32% discount story. Those wanting both income and liquidity without drama should consider MXT or KKC – both offer strong yields (8%+) with institutional-grade liquidity and minimal discount risk.
-
Name Code Closing Price Running Yield NTA Premium/(discount) to NTA Market Capitalisation (millions) Average Daily ASX turnover (000s) Acorn Capital Investment Fund ACQ $0.92 0.07 1.10 -0.17 82.43 56 Glennon Small Companies GC1 $0.54 0.06 0.79 -0.32 25.81 31 Katana Capital KAT $1.36 0.02 1.34 0.01 43.26 7 KKR Credit Income Fund KKC $2.38 0.08 2.46 -0.03 767.63 431 MCP Income Opportunities Trust MOT $1.96 0.09 2.15 -0.09 652.95 397 MCP Master Trust MXT $1.97 0.08 2.01 -0.02 2402.71 1,087 Perpetual Credit Income Trust PCI $1.22 0.07 1.11 0.10 593.99 505 Qualitas Real Estate Income Fund QRI $1.62 0.08 1.61 0.00 983.79 283 WAM Alternative Assets WMA $1.05 0.08 1.19 -0.12 205.40 209
Closing price as at the end of week.