Directors have topped up. Technical looking great. Get set!, page-6

Pretty much correct.

LICs are closed funds that trade subject to supply and demand conditions. That is why they often trade at a premium or discount to NAV.

ETFs, being open funds, are subject to redemptions/creations by market makers. The manager is not necessarily the market maker, however. They are often major financial/investment banks contracted by the manager. Interestingly, however, for many actively managed listed managed funds, the manager is often the nominated market maker. This is due to the fact active managers do not wish to disclose their current holdings in real time.

I understand why you would want an LIC to trade at NAV. However, there are disadvantages and advantages to both strategies.

Proponents of closed funds will argue the locked in capital for the fund prevents massive capital outflows during downturns, simplifies tax and allows for so called bargain hunting when trading at a discount.

Of course, there is always a downside, the fact that your capital is locked in and that you may have to sell your portfolio at a discount is a major disadvantage. The cynic in me also believes this is why fund managers are trying to flog LICs and closed funds so much.... the capital is locked in and accordingly so are the management fees.