Why we should be wary of listed investment companies (The Aust 11/06/19)

Listed investment companies (LICs) and listed investment trusts (LITs) have attracted considerable criticism over the last few months — much of it justified.

One of the important disciplines in constructing a portfolio is about achieving both balance and diversification within and among asset classes. This is set according to an investor’s objectives and their appetite for risk.

It is not about buying a product simply because it is offered. Every product must fit a portfolio and be allocated within its asset class appropriately. There is a conflict in how these products are being sold and investors need to have their eyes open.