<< LSF is a genuine long short fund, with very high gross exposure, considerable portfolio turnover, and it often diverges significantly from index fund performance. L1 Capital already had wholesale and retail unlisted open end funds trading at NAV and could have offered an active ETF too. However, the lure of fees on captive capital was too much and it exploited the selling commissions to raise$1.3 billion for LSF. However, the choice of LIC (not LIT) structure combined with deciding not to expeditiously return tax paid as franking credits, nicely exposes one of the major pitfalls of LICs. Even during periods they are successful, there are large leakages (e.g. tax) andmany LIC managers are loathe to reduce the tax leakage as it also means reducing the capital they charge fees on. The higher the fees/TER the less likely a LIC manager is to efficiently return franking credits. >>
LSF Price at posting:
$2.82 Sentiment: Sell Disclosure: Not Held
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