WAM Strategic Value delivered a solid 9.5% portfolio return for FY2026, outpacing the ASX All Ordinaries by 3.8%, while declaring a fully franked dividend of 6.5 cents per share. New capital gains tax rules are reshaping investor appetite, boosting demand for listed investment companies like WAM.
- Investment portfolio up 9.5% in FY2026, beating ASX All Ords by 3.8%
- Fully franked dividend increased to 6.5 cents per share
- Shares trade at 21% discount to look-through NTA
- New CGT rules favour dividend yield over capital growth
- LIC sector poised for growth amid regulatory tailwinds
Strong Portfolio Performance and Dividend Growth
WAM Strategic Value (ASX:WAR) reported a 9.5% gain in its investment portfolio for the 12 months ending 30 June 2026, comfortably outperforming the S&P/ASX All Ordinaries Accumulation Index by 3.8%. This performance, measured before expenses, fees and taxes, underscores the fund's ability to navigate a complex market environment while delivering solid returns to shareholders.
The company declared a fully franked final dividend of 3.25 cents per share, bringing the full-year dividend to 6.5 cents per share. This equates to a grossed-up dividend yield of 8.3% based on the 10 August 2026 share price of $1.13. Despite this attractive yield, shares continue to trade at a 21% discount to the company's look-through net tangible assets (NTA) of $1.43, highlighting persistent valuation opportunities for investors.
Portfolio Adjustments Reflect Active Management
During FY2026, WAM Strategic Value actively reshaped its portfolio, exiting positions in Platinum Capital (ASX:PMC), Platinum Asia Investments (ASX:PAI), Perpetual Equity Investment Company (ASX:PIC), and L1 Long Short Fund (ASX:LSF). In their place, the fund initiated stakes in Acorn Capital Investment Fund (ASX:ACQ), Bailador Technology Investments (ASX:BTI), and Dexus Convenience Retail REIT (ASX:DXC), reflecting a strategic shift towards sectors and vehicles poised for growth.
One notable actively traded holding is WCM Global Growth (ASX:WQG), which remains a smaller position at 1.3% of the portfolio but exemplifies the fund's focus on global growth assets. The top five holdings collectively represent over 50% of the portfolio, with RG1 and PIA leading at 18.0% and 11.4%, respectively.
Regulatory Changes Boost LIC Sector Appeal
Beyond portfolio metrics, WAM's FY2026 results presentation highlighted a significant structural shift in the investment landscape: the introduction of new capital gains tax (CGT) rules that favour dividend income over capital growth. These changes increase the effective tax rate on capital gains, particularly penalising direct share portfolios where inflationary losses are disregarded, potentially pushing effective tax rates above 60% for top-rate investors.
Listed investment companies (LICs) like WAM benefit from these changes by offering a pooled investment vehicle with a single CGT asset and the distribution of franking credits, making dividend yield a more tax-efficient return. This regulatory backdrop is expected to drive increased investor demand, capital raisings, and sector consolidation, with more than $1 billion anticipated to be raised in August 2026 alone across LICs and listed investment trusts.
Valuation and Investor Considerations
Despite the strong performance and favourable sector dynamics, WAM Strategic Value shares trade at a notable discount to look-through NTA, raising questions about market sentiment and liquidity. The flow-through yield including franking credits stands at 7.71 cents per share, offering a compelling income stream relative to the share price.
Investors will be watching how WAM leverages ongoing regulatory support and capital management initiatives to narrow this discount. The fund’s active repositioning of its portfolio and focus on dividend yield align well with the evolving tax environment, but the persistence of valuation gaps suggests room for further market recognition.
Bottom Line?
WAM Strategic Value’s solid FY2026 results and the tax-driven shift towards dividends position it well, but the persistent discount to NTA highlights ongoing valuation challenges.
Questions in the middle?
- Will the new CGT rules accelerate consolidation and M&A activity in the LIC sector?
- Can WAM Strategic Value narrow its substantial discount to look-through NTA in the near term?
- How will investor preference for dividend yield over capital growth reshape WAM’s portfolio strategy?