Understanding listed investment companies
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Geoff Driver, General Manager of Business Development and Investor Relations at Australian Foundation Investment Company (AFIC), outlines the unique structure and advantages of listed investment companies (LICs) compared to ETFs and managed funds.
He explains that LICs operate with a fixed pool of capital and invest for the long term, allowing patient capital to take advantage of market downturns and deliver consistent fully franked dividends. Unlike ETFs, which must buy or sell based on inflows and outflows, LICs are not forced to transact in volatile markets.
Geoff highlights tax benefits, including internal taxation and simplified reporting for shareholders, and discusses how AFIC, Djerriwarrh, Mirrabooka and AMCIL differ in focus—from large-cap income and growth, to mid-cap and small-cap focus, to high-income strategies using options.
The interview concludes with an explanation of how LIC share prices can trade at a premium or discount to their net tangible assets (NTA), and why this relationship is important when assessing value.
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Source: Finance News Network
