What are Listed investment companies?
Listed Investment Companies (or LIC’s as they are commonly known) are companies with the sole purpose of managing an investment portfolio. They are similar to traditional managed funds but rather than buying units in a trust, investors can buy shares directly in the company on ASX.
LICs are bought and sold on the market just like ordinary shares and investors can decide whether the investment style and underlying investment portfolio of a particular LIC suits their own investment objectives. LICs are a convenient way for investors to get exposure to a portfolio of securities with a single investment.
Unlike Exchange Traded Funds (ETFs), LICs are ‘closed-end’ funds meaning they do not regularly issue new shares or cancel shares as investors join or leave the fund. Instead, they issue a fixed number of shares on initial public offering (IPO) and investors can then buy or sell those shares on ASX. Occasionally, new shares may be issued to increase the size of the fund, or shares may be bought back or cancelled to reduce the size of the fund.
This closed-ended structure allows the fund manager to concentrate on selecting investments without having to factor in investor flows. This stability can be of assistance to managers who take a long-term approach to investing. Also, as companies, LICs have the ability to establish a consistent dividend policy and pay franked dividends.
As LICs trade on the ASX, they must also comply with the transparency and governance guidelines imposed by the ASX and the Corporations Law.
LISTED INVESTMENT COMPANIES MANAGED BY CONTANGO ASSET MANAGEMENT
Contango Asset Management Limited has an Investment Management Agreement (IMA) with Contango Income Generator Limited (CIE) and, through its wholly owned subsidiary Contango International Management Limited, Contango Global Growth Limited (CQG).