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Listed investment companies (LICs) are closed-end funds that only issue a fixed number of shares on initial public offering (IPO). They allow you to invest in professionally managed baskets of Australian and international asset classes, including stocks, property and interest-bearing deposits. Investors can buy and sell shares in LICs on the ASX market.
Although LICs offer similar exposure to asset classes available through many unlisted managed funds, they are generally more transparent as they must comply with the stock exchange’s corporate governance and reporting requirements.
Most LICs usually distribute their income by way of fully franked dividends to minimise tax and produce regular income.
LICs are ideal for investors wanting to achieve market diversification or who many not have the expertise or inclination to invest directly in other ASX-listed companies. Learn more
Usually the management costs associated with established LICs is quite competitive. The management expense ratio of LICs is generally significantly lower than similar unlisted managed funds.
As part of a closed-end collective investment scheme, LICs don't regularly issue new shares or cancel shares, so investors must buy and sell existing shares from each other on the ASX market in order to join and leave funds. This closed-end structure lets the fund manager concentrate on selecting investments without having to factor in money coming in and out of the fund, enabling them to take a long-term approach to investing.