By Ian Irvine, CEO, The Listed Investment Companies and Trust Association
This article is part of a special Australian Shareholders’ Association Insight Series exploring Listed Investment Vehicles (LIVs) – listed investment companies and trusts – that can provide diversification, professional management and income for individual investors.
Across five articles, the series will unpack what LIVs are, how they work, the potential benefits and risks and how they may complement a portfolio focused on longterm, shareholder aligned outcomes.
The aim is to equip ASA members and supporters with practical, independent education so you can make more informed decisions about whether LIVs deserve a place in your portfolio.
The series will be published on the ASA Insights platform over the coming weeks and is provided as general information only, not personal financial advice. We encourage you to read along, reflect on how these concepts relate to your own circumstances, and discuss any potential changes with a licensed adviser if appropriate.
Diversification Made Simple with LIVs
Diversification is one of the few free lunches in investing, yet building and maintaining a truly diversified portfolio takes time, expertise, and discipline. LIVs aim to simplify that challenge by offering instant exposure to a broad spread of assets through a single trade on the ASX. For individual investors juggling work, family, and other commitments, that can be an efficient way to reduce reliance on a narrow group of holdings or sectors.
The underlying portfolios of LIVs can span Australian shares, global equities, credit, private equity and various alternative strategies. By allocating to one or more LIVs with different mandates, investors can assemble a diversified mix of asset classes, regions and styles without having to directly buy and monitor dozens of securities. That can be especially helpful for those whose current portfolios are dominated by a handful of large Australian companies or a limited number of sectors.
Another benefit is that diversification occurs at both the portfolio and manager level. Each LIV itself holds a portfolio of securities, and investors can also diversify across different LIV managers, each with their own investment philosophy, risk controls and income policies. This can help smooth the overall experience of returns through the cycle, as different strategies may perform differently across market conditions.
For ASA members who already hold direct shares, LIVs can complement existing positions by filling gaps in sectors, geographies or asset classes that are harder to access directly. LIVs can also sit alongside ETFs and unlisted managed funds as part of a layered diversification approach, with the added transparency and tradability that comes with an ASX listing. Used thoughtfully, they can help tilt a portfolio away from concentration risk and towards a more resilient, diversified foundation.
The next articles will examine income and longevity, governance and pricing, and practical portfolio applications.
