Author Topic: ETF vs LIC  (Read 1277 times)

EliseHearts

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ETF vs LIC
« on: August 08, 2015, 02:39:22 AM »
Still getting the hang of shares and such and only just discovered LICs today (a bit slow, I know).

Quick research revealed the differences but to my untrained brain, the differences don't seem very major. Am I missing something?

Or is investing in AFIC the same as VAS?

marty998

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Re: ETF vs LIC
« Reply #1 on: August 08, 2015, 07:01:28 AM »
Not quite the same.

Basically an ETF like VAS just buys the every stock in the market in proportion to how big it is (there are variations but that is the gist of it).

A LIC has a Fund Manager who makes decisions about what to buy and sell. A LIC like AFIC holds an index-like portfolio but can make decisions like selling crap stocks if they wish. AFIC also writes covered calls (options) for extra income.

LIC will have higher fees. Depending on the type of LIC the fees can get very high.

Think of it as machine vs man.

The Falcon has written some outstanding posts on this topic.

EliseHearts

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Re: ETF vs LIC
« Reply #2 on: August 08, 2015, 05:00:33 PM »
Thanks Marty99, I'll try track down those posts.