An association for listed investment companies and trusts has defended the segment in the midst of industry scrutiny and the government’s stamping fee review, saying the entities play an integral role in the Australian economy.
The government at the end of January committed to undertaking a public consultation assessing the merits of the current stamping fee exemption with listed investment companies (LICs) and listed investment trusts (LITs).
Stamping fees are an upfront one-off commission paid to financial service licenses for their role in capital raising associated with the IPOs of shares. The government is set to decide whether the fee exemption will be axed, changed or kept as is.
ASIC has also said it will investigate stamping fees paid to stockbrokers in relation to LICs and LITs.
While the Listed Investment Companies and Trusts Association (LICAT) has backed objectives set by the government towards the provision of advice in its submission to the review, it has warned against “unfounded” media and industry reports dismissing its closed-end investment structures.
Angus Gluskie, chairman of LICAT commented: “We have been concerned with the characterisation of the LIC and LIT industry in recent industry and media reports which appear to have misunderstood some of the key structural elements and performance metrics relevant to closed-end listed investment vehicles.”
“Amongst other things our submission to Treasury has sought to clarify these matters.”
Closed-end entities such as LICs and LITs are far more suitable vehicles than open end managed funds and ETFs to provide long-term capital necessary for much of Australia’s infrastructure, LICAT has insisted.
It added the listed entities are also a “vital contributor to market stability” at times when open-end funds and ETFs are forced to sell assets to fund investor withdrawals.
“For investors closed-end entities such as LICs and LITs provide the benefit of having a fixed capital available for investment when markets are at their cheapest, while also offering investors the benefit of liquidity and pricing in the free and open market,” LICAT stated.
Mr Gluskie added the association has worked with and aims to continue to collaborate with Treasury, ASIC and other regulators to ensure protections for the integrity of advice and that the operation of capital markets is not hindered.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].