Listed investment companies: fact, fiction and future

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There has been much debate in the press of late about listed investment companies (LICs). The LIC and trust sector contains some of the largest, lowest-cost, most reliable, trusted and long-lasting investment vehicles that can be access by both retail and sophisticated investors.

However, some of the myths about listed investment companies need to be dispelled, and other facts made, highlighting why the sector continues to represent opportunities for long-term investors.

Fact: There is a structural benefit to an investor from long-term thinking 

When a LIC or trust raises a block of capital, it takes on a responsibility. Mangement must think deeply, plan carefully and implement their process steadily to generage outcomes for investors over not just one or three years but over five, 10 and 20 years.

Secondarily, the fixed capital of a LIC or trust creates the financial stability necessary to invest, sustain and enhance investment teams and processes over time. Good investment teams and good investment processes do not suddenly appear.

This commitment to the long term aligns the responsibilities of closed-end fund management with the best interests of investors.