Fund managers much prefer the LIC structure over ETMFs as the...

Fund managers much prefer the LIC structure over ETMFs as the inability to redeem units means 'permanent' capital, and hence long term recurring management fees (just as a comparison, the unlisted L1 long short fund has seen redemptions every month since June, and the AUM has gone from over 1.3B to just over 600M in a year. As a sign of desperation, it's now open to new investors again after being closed since early 2018). It can take nearly a decade for an unperforming LIC to gain sufficient shareholder activism to compel a winding up or conversion to an unit trust (MA1 and 8EC are the latest examples), during all that time the fund manager makes consistent revenue as long as the capital base stays flat. Due to FoFA reforms, it's also been significantly harder to sell unlisted or listed unit trust managed funds, as the ability to bribe financial advisors to steer clients towards certain funds has been curtailed. LICs remain the sole exception to those reforms.

There are some minor benefits to the LIC structure in terms of smoothing out cash distributions year to year (an ETMF, by virtue of being an unit trust, must distribute all realised capital gains and dividends received to unitholders, making the cash distributions lumpy year to year). However, these benefits really pale when viewed in the light of the severe and persistent discounts across the whole LIC sector.