· Podcast Episodes
The need to be agnostic to what's happening daily. Ian Irvine Listed Investment Companies and Trusts Association

Listed Investment Companies have been around for a long time. They've been used by Aussies to help generate income and compound returns for a century. In this episode I'm joined by Ian Irvine from LICAT to talk about the 100th birthday of Australia's first LIC, active vs passive management and what motor racing can teach us about investing. Here's a link to download the pdf of 100 years of Whitefield, the original Australian LIC.

The Listed Investment Companies and Trusts Association (LICAT) represents the interests of Listed Investment Companies (LICs), Listed Investment Trusts (LITs) and investors holding over 700,000 interests in one or more LIC or LIT. The sector has proved popular with investors for over 95 years, providing easy access to professional fund managers who actively manage a range of underlying asset classes which extend from Australian shares to global equities, fixed income, infrastructure and property across a range of investment strategies.

LICAT - Listed investment companies and trusts association

"They may not hold the 14% that BHP accounts for of the index. They may hold a lesser or a greater amount. That's their investment management decision. And that describes in to some extent what active management is. You have active managers through an investment committee taking active management decisions about where they'll invest, how long they'll invest, and also working with the investments in which they invest. So if they're investing in companies that are listed on the asx, they're generally considered large institutional investors and they have some involvement with the management team and they understand that that more deeply than perhaps what a lot of investors would do"

What is an LIC?


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Chloe (1s):

Shares for Beginners. Phil Muscatello and FinPods are authorized reps of MoneySherpa. The information in this podcast is general in nature and doesn't take into account your personal situation.

Ian (12s):

If you're an active investor, you're an active motor racer, you have a team behind you. So you've got a team of mechanics These days when you're really getting into stuff like Formula One, you've got a lot of the, the analytics, you've got a lot of that. So you've got real time data of how your car's going out on the track. You're talking with the driver, he or she are making corrections. So the parallel would be you've got an investment team, highly paid, getting a lot of information, processing that information very quickly in real time, giving messages back to the investment team to nuance and adjust the portfolio.

Phil (43s):

G'day and welcome back to Shares for Beginners. I'm Phil Muscatello. We hear a lot about ETFs these days, but Australians have been investing in things called LICs for much longer. Joining me today is Ian Irvine, chief Executive Officer, listed investment companies and trust Association. Hi there, Ian.

Ian (1m 0s):

Good G'day. Phil, good to be with you

Phil (1m 2s):

Again. Yeah, thanks for coming back again. LICAT represents the interests of listed investment companies, LICs listed investment trusts, LITs and investors to protect, develop, and grow the sector through advocacy and education. However, before talking about LICs, we're going to go back to some share investing 101. Let's kick off with some of what you believe to be the key investment principles when starting out in the markets.

Ian (1m 29s):

Well, I think when you start out, this may be hard to say when we're talking about a long-term horizon, which is what investing is, think about the endgame. How's this gonna end up? What do I wanna look like in could be 40 years. So when we start talking about a superannuation investment, for example, yeah, we're actually planning for 40 years ahead when your investments turn into income producing outcomes for you as a retiree. So how do I want to invest? What do I want to invest in now that can transition through that course of time to that end game? My retirement, that's, that's a superannuation example. So too, if you're saving or investing for a particular purpose, what's my time horizon?

Ian (2m 10s):

How much will I need? Is it all gonna be through growth or do I need some income along the way? Or I convert the income I receive into growth by reinvesting. So it sit down, do some planning, maybe take a piece of paper, draw a timeline. I'm here, I want to get to there. Here's the picture in my mind of what that looks like. What investments do I wish to make? What's the income I need? What would be the product structures I use? Those sorts of things. And that sounds a little daunting.

Phil (2m 36s):

It is. It's really daunting for some people I think, you know, it's because especially like product structure. Yeah,

Ian (2m 42s):

Yeah, yeah. And one of the best ways to do that is start with self-education. Pretty much what we're doing here now has been to your listeners, congratulations for tuning in. Start to get familiar. If you're unfamiliar with investing, start to become more familiar with the Daily News. We are all talking right now about interest rates. Everyone knows where, where that's at. But it's surprising to learn not many people know, I'm told what actual interest rates apply to their savings and deposit accounts. Everyone's pretty keen on, I own a home, this is what it's costing me. We hear about fixed rate loans and things changing in the not too distant future when some of those roll off. But listening to those sorts of things then broaden your horizons in terms of the input you are receiving from a number of sources, not just relying upon your friends or a particular media commentator.

Ian (3m 26s):

Always listen to a few. So educate yourself, maybe take some online courses. Certainly keep tuning into your podcast. Phil,

Phil (3m 34s):

Thanks for the plug.

Ian (3m 36s):

Always welcome to help because I think they're very helpful in this regard. So get an idea of what you're doing before you race off it. Make your first investment decision.

Phil (3m 44s):

In your notes, you mentioned compounding and understanding about compounding, and one of the things I've been playing around with recently is you go online and you look up compounding calculator, but I've actually found that future value calculators are much more useful in these terms. Explain how future value works and how you can sort of plug into that.

Ian (4m 4s):

Well, I think you may be talking to about net present value. So what's the value in the future of a dollar today? So that takes into account the very real circumstances we find ourselves into the moment inflation, it may adjust it for a more moderate and longer term inflation rate, three 4%, which is where the reserve bank targets, we all know where it's, I

Phil (4m 26s):

Thought it's two to 3%. Well, it's changing all the time.

Ian (4m 29s):

I think coming back from the, the high sevens down to that sort of range is probably appropriate. So there you go. We have a different view on what it is, and I would, I, I'd defer to you because you're more in touch with this, so get to know what the reserve bank's target rate is to understand that. So future value is around taking a dollar a day and applying those sorts of metrics to it in the future, and it will depreciate by those rates. So you've actually gotta earn more than it depreciates over time. Yeah. Just coming back to compounding again as a starting point for a bit of self-education, I always find it's very interesting to do this calculation for yourself. You're right, there's plenty of calculators online, but I often use an example, and this is all fictitious hypothetical, not guaranteed.

Ian (5m 10s):

It's a rough illustration. And when I say rough, I mean really rough. It takes an example of two people aged same at 20. One decides that they will put aside a hundred dollars a week, $5,200 a year, and at the end of that year, one interest payment of 5%, next year they reinvest that interest payment. So it goes up by that $5,200 plus another $5,200 and interest and interest and interest and interest. So they do that for 20 years until they turned 40. Their friend who was 20 back when they started investing has decided they won't start investing until they turn 40.

Ian (5m 51s):

But to catch up, they're gonna invest twice as much. So instead of investing $5,200 a year on a a weekly, over 52 weeks, they invest 10,400. The other person stops investing at 40 but still leaves the money where it is earning the 5%. The other person starts when they turn 40, but investing twice as much, earning 5%, they're now both 60. Who has the most money?

Phil (6m 17s):

I I'm guessing the 40 year old when the one who started when they were 40?

Ian (6m 21s):

No, no. Do the calculation.

Phil (6m 23s):

Oh, okay. I'd have to do that online,

Ian (6m 26s):

But even do it in simple Excel spreadsheet. But as I said, very basic, it's all about the principle, not so much the outcome, but the principle, the outcome is, yeah, will be a surprise.

Phil (6m 35s):

So risk reward is another aspect of this as well, isn't it? And judging, judging your risk. And I don't think listeners often understand what their conception of risk is as opposed to what the financial services. Yep. Definition of risk is because risk in the industry is a measure of volatility, isn't it? That's true. It's not how much your money is at risk, which is what general Punters would think of. Yep. As being the definition of risk.

Ian (7m 3s):

It it is. And the financial markets do talk about volatility and over the last few years we've seen a bit 2022 finished on a relatively flat note and 2023 started on a relatively quick start. And that sort of reflects the volatility so that that's across the market. But also some particular sectors can be quite volatile. In other words, their valuations, share prices, if you will move up and down quite dramatically. From my perspective as an investor, it's the, I can sleep at night factor. That's a measure of risk. How do I feel comfortable about sleeping well at night is to have a well diversified portfolio of investments through a range of asset classes.

Ian (7m 45s):

Typically cash, equities, Australian equities, global equities, property, be that listed property or real property or own, not my own home, but an investment property. So I've got the right proportion and there's no right proportion that can just say this is the same for everyone. So again, it's important to get the right advice, self-education, understand what you feel comfortable with in terms of how much cash do I need, which is generally considered to be lower risk and the property market, if I'm invested directly in the property market, again, as we know right now, we're seeing some volatility there as shared as as prices come off. So what's the right proportion across those asset mixes? And that will change over time.

Ian (8m 25s):

Again, the end game, if I set myself up with that portfolio across a range of asset classes at the outset over the term of my 40, 50 year investment time horizon, that will change closer to the conclusion of that timeline. As I move into retirement, I might be looking to have more in cash. So many super funds, oddly enough, were roundly criticized for holding too much cash and that tended to come from the professional market that always wanted to be fully invested in the assets, not necessarily just for their own benefit and reasons, but so many super funds do hold a lot of cash because they're considering about I will need some money to pay my obligations to my members and those that are in retirement as well as my obligations to terms of the cost of running the fund.

Ian (9m 12s):

So they tend to hold a little bit more right now as interest rates are increasing on deposits, some of them are smiling a little more so than they may have been over the last 10 years or decade or so because they're getting a better return than they had on their cash. So it's become an important asset class in terms of liquidity, easy to get in, easy to get out, as well as earning at the other end of that spectrum. Speaking for liquidity property, real property houses, investment properties, units and that sort of thing. A little more, more difficult to get in and out in a hurry if you need to

Phil (9m 42s):

And active and passive investing. What's the difference? I mean, I seen your notes, you it's being the driver or being driven or just being a passenger. Yeah,

Ian (9m 52s):

I use it. I use that example and there's no, there's no, because we

Phil (9m 55s):

About have cars as well. We

Ian (9m 56s):

Do. We do. We, we'll talk more about BMW versus scooter in a moment. That's an off air, active and passive. There's no right or wrong answer here. It's a combination and again, it's what makes me sleep comfortably at night is, is always a good indicator, but passive tends to reflect an investment that follows an index or tracks an index. Obviously everyone's, most people listening, even if they're not familiar with investing, are familiar with seeing the nightly news where the ASX 200 index is up or down. That index is tracked by a number of passive investments. So you'll always get the index return. An active investor or investment or a manager would seek to do better than that.

Ian (10m 41s):

And there's arguments about the cost of that, vis-a-vis the chances of that, all those sorts of things. Hence it comes back to getting the right mix and melding it together and the annual level of comfort. But an active manager should do better after their fee. So I'll give you an example. Exchange traded funds, ETFs are a very good example of passive investing. Most ETFs available to Australians here and listed overseas, particularly in the US track and index, therefore they're passive investments. in Australia the largest ETF tracks the 300 index and it has a management expense cost of about 10 points 0.101%.

Ian (11m 23s):

It has about 10 billion in thumb funds under management. So it's large. It gets a lot of efficiencies outta that. But it will always give you the outcome of the S&P ASX 300 index, both in terms of growth ups and downs and income. And franking. Compare that with the largest listed investment company, AFIC, which is also about 10 billion. It's an active manager. It doesn't hold 300 stocks or cover 300 stocks as that ET TF I mentioned does. It would probably hold somewhere between 60 and a hundred at any one time. Comparing its meo, it's a management expense ratio of 16.16 of 1%. You're getting an active manager that's been doing this for 50 or more years across a range of stock picks that they think will do well over the long term.

Ian (12m 11s):

So they may not hold the 14% that BHP accounts for of the index. They may hold a lesser or a greater amount. That's their investment management decision. And that describes in to some extent what active management is. You have active managers through an investment committee taking active management decisions about where they'll invest, how long they'll invest, and also working with the investments in which they invest. So if they're investing in companies that are listed on the asx, they're generally considered large institutional investors and they have some involvement with the management team and they understand that that more deeply than perhaps what a lot of investors would do. What's actually going inside the company, for example,

Phil (12m 53s):

What's the difference between an actively managed fund, a managed fund and say an actively managed Lic?

Ian (13m 1s):

It's probably the structure. They are both active as I just described. So they're choosing the components of their portfolios. They have the similarities in terms of their style of management. It's the product structure that's a different piece listed. Investment companies, what we refer to as closed end structures, like any other company listed on the ASX, BHP, Woolworths, Westpac for example. There's a limited number of shares or units on issue at any point in time. They're traded amongst other investors who like to buy in or like to get out and they reach a price and agree that on market, if you like that, and they cross and they, I buy, you get my money, you receive units as as the purchaser.

Ian (13m 41s):

An e active ETF is like another ETF or a managed fund. We're just talking about, it's open-ended. So when you want your money invested, you provide a dollar amount to the manager. They then invest that in their underlying strategy. On the other hand, when you want your money back, you go to the manager and they either sell units to actually find the money to pay you back or there's other money coming in and they cross. So money in it's more than we're actually redeeming. I can redeem, but if I'm, if there's a, for example, more people wanting to get out, they'll be selling the underlying units.

Phil (14m 18s):

So the assets under management's like a balloon that's expanding and contracting. Exactly, yeah. According to how many people are,

Ian (14m 24s):

Oddly enough, that's the, that's the contradiction. One of the key tenets of active management is a stable pool of capital. MM or FUM. I can then go and enact my strategy in confidence that I'm not gonna be tapped on the shoulder and people wanting to take their money out. That happens with an etf that happens with an active ETF as well. Whereas the closed in LIC has that stable pool of capital. This allows them to enact strategies that they can build over time and build over time for the long term. So it's, it's coincidental with their long-term investment management thinking as well as their long-term investors investment thinking. So when we started this conversation about the end game, you almost could say, I need to be agnostic to what's happening daily.

Ian (15m 13s):

I've made a right decision to invest in this investment with this investment manager for the long term. My objectives way over there. What happens today in terms of weather is relatively unimportant. Keep an eye on it, but it's relatively unimportant because the climate that I'm looking for over the 40 year period is what I'm trying to experience. And that's the larger picture. If you've chosen investments in closed end structures that are enacting strategies for the long term, that's probably more appropriate than choosing active managers in an open-ended fund where money can flow out.

Chloe (15m 46s):

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Phil (16m 4s):

2023 is the hundredth birthday anniversary of the first LIC in Australia. And I know it wasn't an L, you've, you've explained to me that it wasn't an LIC at that particular stage, but tell us about that particular lic and some of the other more venerable LICs. Yeah,

Ian (16m 23s):

They're all venerable. Phil. The the we're talking about is Whitefield and it'll turn 100 years old in March, 2023. Yes. For the first few years going back a hundred years or so, it was traded over the counter by stockbrokers before it listed. It listed a few years after it started activities in 1923.

Phil (16m 43s):

So what was it, what was it considered at that stage? What did they talk about?

Ian (16m 46s):

I, I think what you see now is a lot of companies that actually before they come to the market for an IPO actually build up some trading history, right? Yeah. And they get investors on board. So you're not starting from scratch. You've got some money you already invested. You then broaden the pool to which you make your investment offer and they come, they come in in that capital raising. So it helps to build your scale based on recent past performance. So you've got a track record. We all know past performance is not a guarantee of the future, but people can see the cut of AIB for whatever. I'm not a sailor, but I'll use that term. Yep. For example. So it took a a few years to get to the listing and it was an an amalgamation of a number of companies.

Ian (17m 29s):

There's an article on our website Oh

Phil (17m 32s):

Will point to it in the blog post.

Ian (17m 33s):

Yeah, look, l.com au. That's probably the west, the Whitefield story. There's an article on our website which actually covers off the Whitefield story, which is quite interesting in itself. It's, I think we've had discussions in the past about the history of companies, but it had a a great history. It's interesting enough to think people say, oh, LIC is old and little funny Daddy, should I say? Could I say,

Phil (17m 53s):

Well I think a lot of younger investors don't even know what they are. They've never even heard of them. You know, because they're so inundated with ETFs.

Ian (17m 59s):

Very true. Yeah. Well I can tell you this, ETFs are not the new LICs. They're quite different. And they all have different features, benefits and outcomes. And it may be interest. The note that illicit investment company like Whitefield, which is a hundred years old, has really actually kept pace with what's going on. It's quite dynamic in the way it makes its investment decisions. And in that article I referred to the, the managing director, Angus Klasky refers to how investment management techniques have changed over time back in the day from just rule of thumb and ratios through spreadsheets, big big outcome to now the digital age and why it fell through its a hundred years has really kept pace with those changes. So it uses a lot of digital knowledge, not exactly AI, but there's a whole raft of information that even in external spreadsheet could never accommodate.

Phil (18m 47s):

And what are some of the other companies like the, your AFIC and Argos as well?

Ian (18m 51s):

Yeah, similar to Whitefield but a little larger. That 10 billion company I referred to as af, Australian Foundation Investment Company. Actually the AFIC stable consists of four each with slightly different strategies. So Mirrabooka DUI and AMSIL along with AFIC or AFI at Ticker Code, they run different strategies across that portfolio. Very large, very stable Melbourne based business. Argo started in South Australia and I think if you dig deep enough, you find Don Bradman was a company secretary at one stage. Interesting. It too runs two funds. One's a Aussie equity fund, the other is a global infrastructure fund, both using the LOC structure. The thing about listed investment company structures is because their company's listed in Australia making profit in Australia paying tax in Australia, they can also pay fully frank dividends.

Ian (19m 38s):

So when you talk about an asset class such as infrastructure, they can pay a fully frank dividend others in in that grouping. So

Phil (19m 46s):

Just to back up on that, so if you were in another structure, investing in global infrastructure, you wouldn't be able to get Aranking credits?

Ian (19m 55s):

No, unless, so if you're investing in an open-ended fund over asset classes, such as listed infrastructure, that that where there's just cash money coming back into the structure. Yeah, it's, it's paid out as cash. So too with global equities, so one of the larger ETFs available through the OSX is the s and p 500. There's no franking paid with the s and p 500. However, if you chose to use a listed investment company that has an underlying global equity strategy, Platinum, Wilson Global, for example, their companies listed in Australia making profits, paying tax in Australia.

Ian (20m 35s):

Therefore you can actually receive a fully frank dividend on your investment in global equities because the company's based here, their stock and trade is investing offshore. So you notice I did say you can receive dividends are not, not guaranteed. The Frankie's not guaranteed. There's a bit more work to do there too. And that's understanding some of the more accounting details behind it. Others in that stable of AFIC and Argo two based manage, same manager based Melbourne Companies, AUI, Australian, United Investments and DKI diversified United Investments. Aui as the name suggests, invest in Australia. Diversified United Investments has a more global approach. Brickworks or now known as Bki Limited is a, is a, no not, I think it came to market around about 2003.

Ian (21m 21s):

But it also exhibits those characteristics. On the other side of things I've mentioned, Wilson Asset Management, Geoff Wilson runs a range of listed investment companies, all company structures and those attended benefits that I've referred to in dividends and franking credits. And there's a range of other managers, again, back to the LICAT website, we list all of our members. You can see their size and you actually click through their logos to find out a lot more about the company's best said by them.

Phil (21m 47s):

So is that the best place for someone to go and see which of the LICs? Not obviously not which are the best ones, but a list of LICs, I mean there's many places where you can go and see what ETFs are available, but for LICs LI hat's the best place to go.

Ian (21m 60s):

Yeah, it's a good place. Good starting point. We, we have two places we can go have a full list of all 95 list of investment companies and listed investment trusts so you know who they are. And for our members, which account for around about 78 to 80% of the market value, we have a link through to their own websites. That's where you can go and do their own investigation. But back to where we started, just don't go to one source, go to a number of sources. So there's a number of other websites. The ASX is always great. In fact, the ASX is doing a bit of work on its listed investment companies and listed investment trust, education hub, fancy name for a web landing page. A lot more information around listed investment companies and trust there in association with the anniversary of Whitefield.

Phil (22m 46s):

Is it true that many LICs will also take active management roles in that they're in the companies that they're investing in?

Ian (22m 54s):

Yeah, they, they, they on a number of levels, but they're genuinely interested in their, their investments.

Phil (23m 3s):

So it is quite active in that sense. Very

Ian (23m 5s):

Much so. They're active on a number of levels. So, so they, they would, they would typically, once a company makes an announcement, if it's with, within a listed investment company's portfolio and some significance, that company may even actually call on the, on the listed investment company and what they call an analyst call. So they're gonna come and present what they've already made available to the market. There's no, no new news. But they'll actually present that in some, in some form to the listed investment company. And the company can actually, the LIC can actually ask questions and they may well be not just about the financial performance, but about the ESG performance, about other things that the company's doing in, in the social environment and and governance perspective.

Ian (23m 48s):

LICs tend to be particularly focused on the governance aspects. So getting companies to do the right things in the right ways and still run a good business. So they get actively involved in that. To some extent, I'm not totally familiar with this, but active ETFs may do the same thing though I think not. They tend to be more investment oriented on the underlying, making sure that they can deliver on the out the outcoming.

Phil (24m 12s):

So what's the difference between an LIC and an L I T?

Ian (24m 16s):

Again, it's, it's back to structure. So company and we talk through, companies are able to pay fully frank dividends because they're in Australia making profits, paying tax. And an L I T is the same as a managed fund in the sense that it's a trust, but a closed end trust. So it retains its capital, but the tax outcomes are different. But similar to a managed fund, all income needs to be paid out within the financial year. So they pay distributions. Whereas a company pays dividends, distributions are typically not franked. There could be a franking component which may arise from, I've invested in a company that's actually paid a frank dividend and that franking credit will pass straight through to the end investor, but they're untaxed in the hand of the investor.

Ian (25m 3s):

Don't get too excited, you still have to pay tax, but that tax is paid in the tax return wash up. So as opposed to a company who's already paid some tax on your behalf, you get credit for the tax already paid and that can be offset against other tax obligations or added to your tax obligation depending on where you sit in terms of your marginal rate. Whereas for a trust, it all comes into your bank account, but you work it out at at tax time.

Phil (25m 32s):

Okay. I'm gonna throw a question to you without notice. As motor racing fans, ah, what parallels do you think can be drawn between motor racing and investing? And I was thinking about this before. For me it's like having the most frictionless lap around a circuit. It's getting rid of as much friction as possible to have the fastest lap.

Ian (25m 54s):

Yeah, that's a good analogy, Phil. Yeah, motor racing is a, is a good example. There are risks with motor racing as there is, as

Phil (26m 2s):

There is an investing.

Ian (26m 3s):

So let's be cognizant of that. But if you're an active investor, you're an active motor racer, you have a team behind you. So you've got a team of mechanics these days when you're really getting into stuff like Formula One, you've got a lot of the, the analytics, you've got a lot of that. So you've got realtime data of how your car's going out on the track. You're talking with the driver, he or she, you're making corrections,

Phil (26m 25s):

You've got the telemetry,

Ian (26m 26s):

The telemetry, you're way ahead of me there, Phil. So, and then you come into the pits and it's all about how quickly you can actually change the tires and refuel. So the parallel would be you've got an investment team, highly paid, getting a lot of information, processing that information very quickly in real time, giving messages back to the investment team to nuance and adjust the portfolio. If you need to change, you come into the pits, let's do this quickly, let's not protract it. We've made a decision, enact it, but let's not alert the market to that. How are we gonna do this? So there's a lot of comparisons there as well. The other one I'd like to use is sort of, let's come back to you and I, I'm not a motor racer, I know we've got an interest, but it's about driving your own car or taking public transport.

Ian (27m 11s):

Now I'm a fan of both. My car's a 22 year old bmw, but it has a manual gear box. Little unusual these days I, I make the analysis or the comparison is that a passive index tracking is always on the tracks. So it will only go from wherever you live to Central Royal Station. That way most times if there's an interruption, you are stopped. If you are in your car driving, you can actually be alerted maybe through a gps, there's a roadblock up ahead. You can actually take a detour and get around it. You can also choose the speed or the gear in which you want to, you want to travel, make your own investment decisions that way.

Ian (27m 53s):

So I think there's nothing in the matter with always using public transport. In fact, for many instances that's the way to go for many instances in investing, that's the way to go. If you wanna track the goal price or a currency price, that really makes a lot of sense. But if you wanna actively choose a bunch of stocks and don't feel comfortable doing it yourself, getting a professional manager to actually help you drive the car or perhaps drive the car for you, are you gonna take a taxi, an Uber or some other form of higher car to actually help you? And that's the investment manager or advisor I'm talking about to negotiate and you just sit in the backseat or sit alongside the driver, watch the Speedo and a few other things or let let them do it all.

Ian (28m 33s):

So you've got a whole range of options that actually we can draw analogies with, with motorsport as well as just driving your own car or taking public transport.

Phil (28m 41s):

And of course there's always off season when you've gotta develop the car as well.

Ian (28m 45s):

That's the fun part

Phil (28m 45s):

And that's gonna be a big part of it as well. So that's, you know, restructuring your portfolio, presumably

Ian (28m 51s):

Restructuring portfolio, back testing. Actually just having a look, a serious look at how we did last year and then telling people this is how we did last year. That was good, bad or indifferent, this is what we think we need to do to improve on that and make it better than than we did last year. Yes. Yeah, A lot of work off the track as

Phil (29m 9s):

Well. Yeah. Invest to survive and

Ian (29m 11s):

Always wear your investmen seatbelt.

Phil (29m 14s):

Okay. Well, so looking at the off season for an L I C or an L I T, do these things change over time and evolve over time?

Ian (29m 23s):

The nature of the L I C itself? The strategy result?

Phil (29m 25s):

Yeah, the strategy,

Ian (29m 26s):

They're offseason

Phil (29m 27s):

The charter that they might be working towards. Yeah,

Ian (29m 31s):

Again, it's important that investors keep in touch with what's going on with management. I must say list of investment companies are very good on communication. There's a lot of information that the company or trust will actually send to investors on a regular basis. So, and any of those changes to the underlying strategy is significant. So because they're listed on the asx, we'll have an obligation under continuous disclosure to make sure the market and their investors are equally in terms of timing, fully informed, where it's a material change. So if they were to change the direction, what they intend to head, yes, there's a lot of work to do. And being shareholders, you have a vote. So you actually are not an investor, you're an owner.

Ian (30m 12s):

And when you, an interesting mindset. So when you invest in a company, be a listing investment company or bhp, you are taking a proportional holding as an owner, you are giving them your money as equity. That's what they call equities shares. Make it easier cuz it's your share of that business. That's exactly what it is. You're giving them your money. That varies a little too. When you, when you actually invest alongside managed fund or an etf, you, you're an investor. You like their investment philosophy and where they're headed and the way they want to do things. So you're actually investing with them as opposed to being an owner in that fund.

Phil (30m 48s):

Ian Irvine, thank you very much for joining me

Ian (30m 50s):

Today. As always, Phil. Great pleasure.

Chloe (30m 53s):

Thanks for listening to Shares for Beginners. You can find more at sharesforbeginners.com. If you enjoy listening, please take a moment to rate or review in your podcast player or tell a friend who might want to learn more about investing for their future.

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