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 long-term, shareholder aligned outcomes.
The decision to add LIVs to a portfolio should start with clear objectives and an honest assessment of current positioning. Many Australian investors find themselves heavily concentrated in a few domestic blue‑chips, property, or cash, often as a result of legacy decisions rather than deliberate design. LIVs can help rebalance those exposures by adding professional management, diversification, and potentially different sources of income and risk.
Practically, there are several ways LIVs might fit into a portfolio. An investor focused on income might allocate to LICs with a track record of sustainable, franked dividends, while someone seeking global growth exposure could consider LIVs investing in international equities or alternative assets. For those wanting to reduce reliance on bank term deposits without abandoning capital discipline, credit or defensive‑tilt LIVs may be worth investigating.
Implementation is straightforward, as LIVs can be bought and sold on the ASX through existing brokerage accounts, just like any other listed security. However, as with all investments, there are risks, including market risk, manager risk, and the possibility that shares trade at persistent discounts or premiums to NAV. Careful attention to fees, investment process, governance, and alignment with personal risk tolerance is essential.
For ASA members, LIVs can also offer an additional avenue for engagement, education and stewardship. Following board decisions, monitoring capital management initiatives, and understanding how managers navigate cycles can all contribute to being an informed, active shareholder. With appropriate due diligence and advice, LIVs can serve as a flexible tool to refine portfolios, improve diversification, and support long‑term investment outcomes.
