The Australian Securities Exchange (ASX) is planning to launch two sub-sector listed investment company (LIC) indices next week, in addition to a recently established composite LIC index.
"There will be one sub-sector for those LICs that have predominantly a domestic focus and one for those that have a more international focus," ASX business development manager Jonathan Morgan said yesterday.
"The reason why we are splitting it up is that the companies with an international focus tend to benchmark themselves to the MSCI, rather than to the ASX 200 or All Ordinaries index."
The creation of the indices helps financial planners advise clients on investing in LICs, as it will give them the ability to compare particular companies against the average industry performance.
The launch was initially planned for this week, but a delay in data calculation is likely to push it back until next week.
On 2 January, the ASX launched the ASX LIC index in a response to a request from the industry for a recognised benchmark.
LICs invest in a variety of securities and therefore cannot be included in general market indices, as this would create the problem of double counting securities.
Their exclusion from a recognised industry index also means research houses often refrain from rating these companies.
The ASX LIC index tracks more than 40 LICs, such as Australian Foundation Investment Company and Argo Investments, with a combined market capitalisation of more than $10 billion.
The creation of the indices could also boost investment in the sector from New Zealand, where investors receive tax benefits from investing in securities that are part of a recognised ASX index.
