If you’re searching for the best long-term investments in Australia, you’ve probably heard listed investment companies being mentioned a few times. So what exactly are they, and how can they help you grow your wealth? At Flagship Investments, we’ve put together a list of the most commonly asked questions regarding listed investment companies to help guide you on your investment journey.
What is a Listed Investment Company?
A listed investment company (LIC) is a closed-ended fund listed on the Australian Securities Exchange (ASX). These investment companies are closed-ended, meaning they have a fixed number of shares that they offer to investors and shareholders on the ASX.
How Do Listed Investment Companies Work?
Listed investment companies work similarly to managed funds in that they have a designated fund manager overseeing and choosing the company’s investments. The fund manager will analyse the market and actively choose the best companies to invest in, either Australia-wide or globally, depending on the company’s business structure. In turn, they will create a portfolio comprised of high-performing companies that they expect will yield the best results over time.
Do I Own Shares in the LIC, or in the Companies They Invest in?
When you invest in a listed investment company, you own shares in the LIC, not the companies in their portfolio. This provides investors with a more streamlined way to garner interest from multiple high-performing businesses while still only investing in the one company.
Is a Listed Investment Company a Long-Term Investment?
LIC investments are undoubtedly intended for people looking to invest long-term rather than short-term. LICs are designed to help you accrue wealth over decades, providing investors with more stability than short-term strategies that require you to trade shares multiple times a year.
How Can I Buy and Sell LIC Shares?
You can buy and sell shares in listed investment companies on the ASX. To read more about the ASX, LICs, and how to invest in stocks and trade shares, check out our Beginners Guide to the ASX.