Listed investment companies (LIC) are close end investment funds listed on the ASX. Each listed investment company has a specific mandate either focusing on Australia, overseas or a combination of the two.
Value of LIC is dependent on the tangible value of the underlying assets in the fund divided by total units outstanding.
Difference between Listed Investment Companies and Exchange Traded Fund (ETF)
There are a couple large difference between LIC and ETFs.
Active Manager – ETFs are passive index investment funds that aim to track the performance of the market or specific market. An example of market index ETF is ASX IVV which tracks the S&P 500 Index. LICs can be considered actively managed funds for investors that rely on the manager to pick stocks and beat the benchmark index over a set timeframe.
Fees – The advantage of ETF has over listed investment company funds is its low cost. However it is important to note that it can be apples to orange comparison. ETFs are mostly passive funds while LICs being an active manager would have a higher cost to compensate for the work that is required to do the research to find the right stock. These companies are also externally managed.
Aggregate value of the fund – Total value held by LICs are fixed and only changes through dividend reinvestment plans or capital raise. Total asset under managed of any ETF listed on the ASX is based supply and demand of the fund by investors. It changes based on purchases and sales of the ETF units by investors. The aggregate amount in the fund matches changes in investor appetite.
Listed investment companies on other hand are closed end funds where the amount invested is fixed. Marginal buying and selling of listed investment companies shares only pushes the price of the companies up or down. Total value in the company does not change. Hence the price of LIC can be at a premium or discount to the underlying fund net asset value.
By this virtue ETFs can be more liquid as excess demand and supply by investors can be filled by the market makers. Market gyrations in investor buying and selling of listed investment companies can move the share price either at a premium or discount to underlying asset value.
Most of the companies are purely focused on Australian equities. This means changes in FX rates like NZD vs AUD, EUR vs AUD would have limited direct impact. There is indirect impact on the business exposure of the underlying fund investments.
ASX Listed Investment Companies List
Below is a partial list of LICs on the ASX. Not all companies are included but it provides a good picture of LIC options available.
|AFI||Australian Foundation Investment Co.Ltd.||$6,812 Mil|
|ARG||Argo Investments Limited||$5,520 Mil|
|DJW||Djerriwarrh Investments Limited||$1,078 Mil|
|WAM||WAM Capital Limited||$884 Mil|
|CIN||Carlton Investments Limited||$836 Mil|
|PMC||Platinum Capital Limited||$439 Mil|
|WHF||Whitefield Limited||$357 Mil|
|MIR||Mirrabooka Investments||$375 Mil|
|TGG||Templeton Global Growth Fund Ltd||$352 Mil|
|PGF||PM Capital Global Opportunities Fund Ltd||$375 Mil|
|WAX||WAM Research Limited||$194 Mil|
|CTN||Contango Microcap Ltd||$169 Mil|
|WIC||Westoz Investment Company Limited||$122 Mil|
|ALR||Aberdeen Leaders Limited||$69 Mil|
|OZG||Ozgrowth Limited||$56 Mil|
|KAT||Katana Capital Limited||$38 Mil|
|ACQ||Acorn Capital Investment Fund Ltd||$39 Mil|
|WAA||WAM Active Limited||$35 Mil|