Argo Global Listed Infrastructure Limited

Argo Global Listed Infrastructure Limited is an Australian Listed Investment Company (LIC) listed on the Australian Stock Exchange with the ticker code ALI. ALI focuses on investments in the global infrastructure sector and offers investors exposure to a diversified portfolio of global listed infrastructure companies. It was listed on July 3, 2015, and has been operating for 8 years.

ALI's primary investment objective is to provide shareholders with a combination of long-term capital growth and dividend income while offering important diversification benefits to Australian investors. It is managed externally by Cohen & Steers Capital Management and has a market capitalisation of approximately $350 million.

ALI's primary investment focus is on the global infrastructure sector, with a portfolio bias towards large-cap companies. The benchmark used to evaluate its performance is the FTSE Global Core Infrastructure 50/50 Index in AUD. This benchmark reflects the global infrastructure investment universe that ALI aims to track and outperform.

When evaluating Argo Global Listed Infrastructure Limited (ALI) as an investment option, several crucial metrics should be considered:

• Growth and Risk Asset: recognise that ALI invests in global infrastructure companies, which can be considered growth/risk assets. When assessing ALI, it should be viewed as a growth/risk asset in the context of your overall investment portfolio. One advantage of the LIC structure is its ability to provide a combination of capital growth and dividend income over time, offering diversification benefits. However, it's important to note that income is not guaranteed, and market fluctuations may impact future dividend payments.
• Long Term Performance: Assess ALI's long-term performance by examining whether it has delivered consistent after-fee returns over an extended period, typically exceeding five years. This analysis helps gauge the fund's ability to generate returns over extended investment horizons.
• Dividend Reliability: Investigate ALI's historical track record of maintaining or increasing dividend payments to shareholders. Reliable dividend payments can be a crucial consideration for investors seeking income stability.
• Underlying Holdings: Gain insights into ALI's underlying portfolio holdings, which comprise global listed infrastructure companies. As LICs can invest in a diverse range of assets, understanding the composition of these investments is vital. You can find detailed information on ALI's holdings in its reports, ensuring alignment with your investment goals and risk tolerance.
• Fees: Consider the cost of investing in ALI by evaluating its Management Expense Ratio (MER). The MER for ALI was calculated at 1.59% in the most recent financial year. The MER provides insight into the expenses associated with the fund, expressed as a percentage of its net tangible assets. Understanding the MER helps assess the impact of fees on your investment returns.

A Listed Investment Company (LIC) is one type of investment fund structure (i.e. shareholder funds pooled together and invested together, either actively by a manager, or passively). Other types of investment funds include Exchange Traded Funds (ETFs) (which can be both actively managed or passive), Listed Investment Trusts, or Managed Funds.

The different structures have their own positives and negatives, which are dependent on the goals of the investor and their own individual investment structure.

Some of the benefits of the LIC structure (the structure of ALI) include:

• It's a closed-end investment vehicle: Meaning the manager has a fixed pool of capital to invest with a long-term mindset, and doesn't have the risk of fast redemptions by investors in a time of market panic.
• They can smoothen out income to the investors: Which can be beneficial for both tax efficiency and emotional mindset, due to being able to retain profits over time (as compared to the trust structure, which must distribute income and crystallized capital gains to the investor in that financial year).
• The income will most likely be in the form of fully franked dividends: Which is an attractive form for Australian retirees due to the franking system in Australia. Since LICs are companies themselves and pay tax in Australia on profits, they receive franking credits paid on the tax they pay, in addition to the franking credits they receive from their investment portfolio. Well-managed LICs ensure their franking credit reserves are sufficient to pay future fully franked dividends (see 'franking reserves' chart above).