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Share price to
Net Tangible Assets (NTA)

It is important to take note of where the share price is trading relative to the net tangible assets.

Investors in Listed Investment Companies often talk about shares trading at a 'discount' or 'premium' to NTA, below is an explanation of what this means.

Share Price is the current price of an AFIC share on the ASX. Net Tangible Assets per share (NTA) is the value of the total portfolio divided by the number of shares on issue.

Using a simple example, if the value of the total portfolio is $100 and the number of shares on issue is 10, then the NTA is $10 per share.

NTA per shareShare priceTrading
$10$11At a premium
$10$9At a discount

The chart below outlines where the AFIC share price has been trading relative to the NTA at the end of each month.

Screenshot 2024 05 03 162123

There are a number of factors that influence whether shares trade at a discount or a premium.

  • Market perception of AFIC’s future earnings potential and dividends
  • Perception of management and likely future performance
  • Supply and demand for shares at any one time can fluctuate. In particular, LIC shares such as AFIC, sometimes fall out of favour. When the general market is running strongly investors may elect to move out of "value" shares into "growth stocks". Conversely when market conditions are more subdued investors may value a steadier stream of dividends and a value-based approach to investing
  • The relative benefit of lower costs of managing the portfolio on behalf of shareholders compared with the higher costs associated with a large proportion of managed funds.