Platinum Capital Limited

Platinum Capital Limited is an Australian Listed Investment Company (LIC) listed on the Australian Stock Exchange with the ticker code PMC. PMC specialises in investments in global equities, providing investors with exposure to an actively managed, diversified portfolio of companies from around the world, spanning both developed and emerging markets. It has been listed since January 1, 1994, and has been operating for over 30 years.

PMC's primary investment objective is to deliver capital growth over the long term by investing in undervalued companies worldwide. It is managed externally by Platinum Investment Management Limited and has a market capitalisation of approximately $400 million.

PMC's primary investment focus is on global equities, with a portfolio bias towards large and mid-cap companies. The benchmark used to assess its performance is the MSCI All Country World Net Index in AUD. This benchmark reflects the global investment universe PMC aims to navigate and potentially outperform.

When evaluating Platinum Capital Limited (PMC) as an investment option, several critical metrics should be considered:

• Growth and Risk Asset: recognise that PMC invests in global equities, which are considered growth/risk assets. It should be viewed as a growth/risk asset within your overall investment portfolio. PMC's strength lies in its ability to actively manage a diversified portfolio of companies from around the world. However, it's essential to acknowledge that investing in equities carries inherent risks, and returns can vary based on market conditions.
• Long Term Performance: Assess PMC's long-term performance by evaluating whether it has delivered consistent after-fee returns over an extended period, typically exceeding five years. This analysis helps gauge PMC's ability to achieve capital growth over extended investment horizons.
• Dividend Reliability: Investigate PMC's historical track record of maintaining or increasing dividend payments to shareholders. This factor is crucial for investors seeking income stability alongside capital growth.
• Underlying Holdings: Gain insights into PMC's underlying portfolio holdings, which encompass a diverse range of companies worldwide. Understanding the composition of these investments, including industry sectors and geographic regions, is vital to ensure alignment with your investment goals and risk tolerance.
• Fees: Consider the cost of investing in PMC by evaluating its Management Expense Ratio (MER). PMC's MER, which includes the management fee and other expenses, was calculated at 1.47% in the most recent financial year. Understanding the MER provides insight into 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 PMC) 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).