boardroom all stars, page-6

Many of the larger LICs are almost market cap-weighted anyway, which is why they tend to loosely track the index. I think a lot of their outperformance and underperformance is attributable as much to luck as to the skill of their managers. That said, AUI/DUI's outperformance over the last few years' bullmarket may be due to their leveraging: they tend to be approximately 10% geared which amplifies their returns. Conversely ARG has no borrowings, so with all else equal, it should theoretically perform better in bear markets.

Buffett says you should only invest in companies whose shares you would be happy to hold if the stock exchange were to close down for ten years. STW (and the larger LICs) are examples of such companies.

The only drawback of STW (which might bother some people relying on income from shares) is that its dividends can be inconsistent, whereas LICs tend to pay steadily increasing divs.