At our Switzer Webinar last month, and again last week in meetings, a question that was raised by several investors was “What is better, an ETF or a LIC?” and then followed up by, “Which one?” If I have lost you already with the acronyms, I am talking about Exchange Traded Funds (ETFs) and Listed Investment Companies (LICs).
While many investors prefer to construct their own portfolio of direct shares, others can see the advantages of using a managed investment – particularly if they don’t have a lot of time to follow the market. Some investors use managers to complement a portfolio of direct shares – while others go the opposite way and run a core portfolio with a manager and then invest in individual shares as the satellite component.
Two of the easiest ways to gain exposure to the market are through broad based LICs or index tracking ETFs. Listed and traded on the ASX, both are managed investments.