LICAT calls for recognition of ‘misunderstood’ investment trusts

The Listed Investment Companies and Trusts Association (LICAT) has called for Treasury to recognise the importance of listed investment trusts and companies to the Australian economy as it fears they are ‘misunderstood’.

It said closed-ended vehicles could provide stable, long-term capital for investors and be a vital contributor to market stability as they were not forced to sell assets to fund investor withdrawals. They also provided fixed capital and offered the benefits of liquidity and pricing in the open market.

They were also offered structural benefits to investors such as better investment structures and cost and administrative efficiencies as well as the ability to fund Australian infrastructure such as renewable energy and roads.

Angus Gluskie, chairman of LICAT, said: “LICAT recognises Treasury’s interest in both the integrity of financial advice in Australia and the successful operation of the capital markets that fund Australian business. To that end, we hope to continue to work with Treasury, ASIC and other regulators as well as various industry participants, to ensure these protections are safeguarded and the operation of capital markets not hindered.

“However, we have been concerned with the characterisation of the LIC and LIT industry in recent industry and media reports which appear to have misunderstood some of the key structural elements and performance metrics relevant to closed end listed investment vehicles.”

Looking at performance, LICAT said 57% of LICs or LITs had outperformed their benchmark since 2015 compared to 18% of managed funds.

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