LICs and LITs here for the long haul

Listed Investment Companies (LICs) and Listed Investment Trusts (LITs) may have been regarded as unfashionable but they should not be overlooked by financial advisers or their clients.

That was the bottom line of a webinar conducted by the Listed Investment Companies and Trusts Association with Financial Newswire this week with Wilson Asset Management chief financial officer, Jesse Hamilton stressing the inherent benefits of the structures, particularly the ability to make long-term investment decisions.

He noted the ability of the structures to deliver a stream of fully-franked dividends and provide opportunities for investors when the shares traded at a premium or discount to their underlying asset backing.

The sector had also grown from being worth around $40 billion in late 2017 to being worth around $60 billion in August, this year.

The increasing versality of the sector was also underlined by Qualitas Global Head of Strategy, Kathleen Yeung which had brought a real estate investment fund into under a Listed Investment Trust (LIT) structure.

She noted that the trust structure was suited to debt or passive investments that earn interest rather than for actively managed stocks such as equities.

Whitefield managing director, Angus Gluskie said he believed that LIC and LITs had a solid future but were not suited to everyone and would certainly not suit investors who wanted to move in and out of investments and take a short term view.

Rather, he said that they would suit investors who were committed to long-term investment and appreciated the benefits of stable, far-sighted management and lower operating costs.

“Sensible investing always requires long-term commitment – something the closed-end structure encourages and embraces,” he said.