NAOS manage three Listed Investment Companies (LICs), the NAOS Emerging Opportunities Company (ASX: NCC), the NAOS Absolute Opportunities Company (ASX: NAC) and the NAOS Small Cap Opportunities Company (ASX:NSC).
LICs are a viable and well established alternative to managed funds and direct equity holdings as they provide investors with a great way to achieve diversification whilst providing the transparency and ease of administration of a listed security.
The key characteristics of LICs that we believe make them an attractive investment alternative include:
- LICs offer investors ease of administration. There is little to no paperwork involved with investing in a LIC if individuals already have share trading accounts established (for example, Commsec, ETRADE etc.)
- LICs offer investors a high degree of transparency, as they are governed by the ASX’s corporate governance and reporting requirements.
- LICs are structured to maximize effectiveness when it comes to the tax treatment and frequency of dividend payments with franking credits attached.
- LICs are ‘closed end’ in nature, meaning they are not ‘forced sellers’ to meet the withdrawal demands of investors. Investors simply buy and sell shares in LICs from each other through the stock exchange.
- There is no requirement for LICs to be fully invested at all times, unlike many unlisted funds, providing LIC managers with the flexibility of holding high levels of cash to hedge their portfolios at appropriate times.