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), also known as an LIC in the finance sector, is a type of investment company in Australia that 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 select the best companies to invest in, positioning LICs as a cornerstone of Australian listed investment companies, with investment opportunities either Australia-wide or globally. 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, especially those considered among the best listed investment companies, are undoubtedly designed for individuals seeking long-term rather than short-term financial growth. 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.
Choosing the Best Australian Listed Investment Companies
When deciding which LICs to invest in, consider factors such as historical performance, management quality, and fee structure. This guide will help you identify the best Australian listed investment companies, tailored to your investment goals.
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.
A listed investment company (LIC) is a closed-ended investment fund listed on the ASX, which does not regularly issue new shares or cancel them but instead allows investors to buy or sell shares on the exchange.
Investing in Australian listed investment companies offers benefits such as diversified portfolios managed by professional fund managers, potential tax advantages, and the ability to participate in a range of assets.