What are listed investment companies?
Listed Investment Companies (LICs) provide investors with exposure to a professionally managed portfolio of assets held by the company. These assets may include Australian shares, international shares, fixed income securities, property, and unlisted private companies. LICs' investment approach can range from a long-term value focus to more active trading strategies. Shares in LICs trade on ASX in the same manner as any other company. They have their own separate boards, own governance structures and are required to report their financial results to the market every six months.
The 'closed end' structure of LICs means the number of shares on issue is stable and the manager does not regularly issue or cancel shares as investors enter and leave. This allows the investment manager to concentrate on the performance of the fund without having to consider any inflow or outflow of monies. This capital stability assists Amcil in taking a long-term approach to investing.Theory suggests this approach leads to better investment returns.
Investors may purchase additional shares onmarket or through purchase and dividend reinvestment plans. LIC pricing is related to the value of the assets held in the portfolio, and the market perception of the company's future earnings potential. Occasionally, an LIC may issue new shares to increase the size of the portfolio through dividend reinvestment plans, share purchase plans and rights issues. They may also buy back and cancel shares in order to reduce the size of the fund, although this occurs less frequently. These decisions are made at the discretion of the Board.
There are many LIC’s listed on the ASX with different investments styles and objectives. AMCIL seeks to provide shareholders with exposure to a concentrated portfolio of of both large and small companies with a view to providing capital growth and fully franked income for shareholders.