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Tony Featherstone is a Morningstar contributor and a former managing editor of BRW and Shares magazines.

The listed investment company (LIC) sector has had a forgettable 12 months.

Monthly average trading volumes have almost halved over the year to July 2012 and the monthly value of trades has declined by 28 per cent, Australian Securities Exchange (ASX) data shows.

Over two years, trade volumes are down almost 60 per cent, and the number of ASX-listed LICs has fallen from 62 to 50.

But beneath the gloom are some strong performances from LICs that invest in small and mid-cap equities.

LICs, such as WAM Capital, have a lower profile than some larger small-cap managed funds despite better investment performance than their unlisted peers, and trading at a discount to their pre-tax net tangible assets (NTA).

WAM Capital (WAM) shares have rallied from a 52-week low of $1.34 to $1.62, and are within sight of their 2007 high above $1.80.

It traded at a 3.57 per cent discount to its pre-tax NTA in June 2012, ASX data shows.

The discount was 7.5 per cent in June 2011 and 24.63 per cent in June 2010.

WAM's investment portfolio increased 5.7 per cent for the year to 31 July 2012, which trumped a 0.2 per cent fall in the S&P/ASX All Ords Accumulation Index.

Since inception in 1999, its portfolio has grown 17.6 per cent a year and outperformed the All Ords Accumulation Index by 10.5 per cent annually.

Most Australian small-cap equity managed funds have struggled to return much more than 10 per cent annually over the past 10 years.

WAM's full-year, fully franked dividend (11 cents) is up 10 per cent, and it is raising up to $25.5 million through a placement to expand the fund's size and appeal to more research and dealer groups and financial advisers, improve liquidity in its shares and spread fixed costs.

Clime Capital (CAM) is also performing well. Its shares have rallied from 88 cents in January to 96 cents, and its discount to pre-tax NTA has narrowed from about 25 per cent in June 2010 to 17 per cent in June 2011 and 16 per cent in 2012.

Its total shareholder return, 22.4 per cent annually since January 2009, compares with an 8.1 per cent annual gain on the All Ords Accumulation Index over this period. Clime invests in smaller and larger companies, and interest-rate securities.

Contango Microcap (CTN) has not performed as well this year.