spp plus a dividend, page-6

I'm familiar with the article you've described.

http://www.eurekareport.com.au/iis/iis.nsf/ak/nudEzr?opendocument

I think it's worth noting that the 5-year period for which the author compared LICs to the index happened to be a period of enormous growth, with an average annual return of 19.3% for the ASX300 accumulation index. As he suggests, LICs are said to trade at a premium to NTA during bear markets, and at a discount during bull markets, and this might explain why the LICs' returns during this time was less than that of the index. It would be interesting to compare them over a longer period (say 10 or 20 years) and include only the larger, more established LICs (e.g. ARG, MLT, AFI, AUI).

I invest in LICs mainly because I expect them, being so diversified, to provide returns approximately equal to those of index funds but with lower fees. They also have other advantages over index funds, including:

- more predictable dividends
- dividends are fully franked
- much simpler than index funds come tax time
- they offer SPPs and DRPs at a discount to the prevailing share price
- the occasional rights issue
- possibility that they will outperform the index (though, of course, they may well underperform). Long term, I expect the good LICs (i.e. the ones I'm invested in) to perform about as well as the index

Hope that helps.