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LICs
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Managed Funds
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Structure
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Assets held by a company.
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Assets held in a trust.
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Tax
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Paid by the company at 30%.
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Income and capital gains passed to the investor and taxed at their marginal tax rate.
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Dividends
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Fully franked.
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Franking level depends on the assets held.
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Buying / selling the investment
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Like any company share, you can only buy or sell a share in a LIC via the ASX. Price is set by supply and demand.
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You can buy and sell units in the trust at any time. Unit price will reflect the value of the underlying assets.
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Regular investing/savings program
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Don’t offer a regular savings program. To save money on brokerage it’s best to buy larger tranches of shares.
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Once the minimum investment is made, purchase of units can be made through regular contributions to the fund.
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Assets
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Invest in a wide portfolio of assets including Australian and international shares, fixed interest and property.
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Invest in a wide portfolio of assets including Australian and international shares, fixed interest and property.
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Target returns
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Usually strive to achieve stable and growing income for investors with some capital gain. LICs adopt a “buy and hold” strategy.
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Usually strive to achieve a benchmark return (eg. ASX200). May actively trade to improve returns.
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Cost structure
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Often lower than managed funds because they trade less often and do not use a distribution system.
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There is an administration fee to cover the costs of the ongoing management and reporting. Investors pay fees when they switch between investments.
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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions.
It's also important to note that the legislation and figures related to this topic tend to change regularly and
therefore the information above may not reflect the current status.
We recommend that if you are looking for advice on this matter, you should contact us.