LICs and LITs experience growth in asset classes beyond Aussie equities

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As the Australian listed investment industry enters its 99th year, the sector is continuing to experience growth in the newer asset classes such as property, credit, and global equities.

Over recent years there has been strong growth in the number and value of LICs and LITs offering investors access to global equities, Asian markets, infrastructure, and alternative assets such as private equity and private debt as well as fixed income, reports the Listed Investment Companies and Trusts Association (LICAT).

“Since the end of 2017, the total LIC and LIT sector has grown from $39.6 billion to $55.8 billion to be up 40.9% at the conclusion of October 2021,” said Ian Irvine, CEO of LICAT.

While there has been an uplift in Australian equities in terms of value over the past four years to $34 billion, the overall proportion of the sector they hold has shifted from 77% to 61%.

“Over the same period the proportion of LICs and LITs holding global equities has almost doubled from $8.5 billion in total to $16.1 billion, to account for 29% of the sector,” Mr. Irvine said.

There has also been extremely strong growth in fixed income LITs, from $650 million to a current value of $5.5 billion at the end of October; accounting for 10% of the sector total.

“This changing dynamic provides investors and their advisers with access to the closed-end structure of LIC/LITs over a broader range of asset classes, assisting with their asset-allocation and diversification strategies while delivering on the many benefits these structures offer,” said Mr. Irvine.

 

“The closed-end LIC or LIT structure can be suited to the holding of longer duration assets or longer-term investment strategies, while still providing underlying investors with the ability to increase or decrease their investment at any time, by buying or selling shares/units on ASX,” said Mr. Irvine.

LICs and LITs have been assisting investors in growing their wealth for nearly 100 years. Today, over 700,000 Australians invest in the LIC/LIT sector, according to LICAT.

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