Owen Rascovich

Whereas an ETF is kind of just like algorithmic.

Money comes in, money buys X shares.

And that's just the way they work.

But LICs are definitely, you get that expertise when you buy into, quote unquote expertise when you buy into a LIC.

Some fund managers are better than others, of course.

But that's kind of one of the reasons you'd buy in.

We seem to have beaten up LICs a bit, but another really good reason or a compelling reason you would buy a LIC is for franking credits.

So the company itself generates franking credits.

And typically if it's investing in Australian shares, for example, it's also going to generate franking credits from the dividends that it receives in the portfolio.

So you have some LICs in Australia that pay out pretty generous dividends and franking credits with those.

Yeah, and that's in contrast to a listed investment trust or a trust that has to distribute income.

A company can hold onto it.

It can almost like put it in the bank and then if something, say like the GFC hits and shareholders have just witnessed the actual value of their shares fall considerably, they might say, well, hey, we're going to pay a generous dividend this year because we know the market's been bolt up.

slow and steady they're not there to do anything crazy but they give you a slow and steady regular income over the investment and that's why it is quite a popular investment for some investors yeah and I think one of the really compelling things again about this investment companies is so it's like it's a it's a it's a catch-22 as an investor you have locked in capital so you mentioned that early on the money stuck inside

But by the same token, the money is stuck inside.

So if you take a long-term investing approach and you back the investment manager to do the right thing, they can invest without the worry of what money is coming in and out of a managed fund and all that sort of stuff day to day or an ETF.

If you ran a managed fund, you have to worry about flows, what we call fund flows.

So money coming into the fund, money going out.

You constantly worry about your job.

And so you're always trying to make your results look better than what they might be.