I have been burnt the exact same way... bought into a managed...

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cutty

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15/08/20

00:23

Post #: 46558811
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Originally posted by woollydog: ↑

I like the new ETMF option for the elimination of discounts / premiums to NTA and look forward
to seeing many more.
there are 2 advantages of LICs however

1) they can choose how much dividend to pay out which allows
for smoothening out of dividends and franking credits from year to year.
so if they have a really good year, they can choose to pay out say 80% of profits in dividends
resulting in a moderate increase from the previous year, and the following year even if the market
crashes they have kept some reserves so they can still maintain the same level of dividend or better.
if you look back at the GFC years 2008, 2009, 2010, the AFI LIC maintained it's 24 cps dividend
every year even though sharemarket dividends fell a lot.
whereas ETMFs, much like unlisted unit trusts, pay it all out every year so a much lumpier dividend
payout. perhaps nil dividend in a bad year.

2) also at tax time, LICs are much simpler on your tax return. just enter franked amount ( or unfranked )
and enter franking credits, same as your CBA shares.
whereas ETMFs, like unlisted unit trusts, can be a real mess with non-primary production income,
realised capital gains, etc. note you are then liable for paying capital gains tax on gains made by the
fund. so if you buy in late June, you are then liable for paying capital gains tax on capital gains that
the fund made at any stage from trading in the past 12 months, which can be a real shocker to behold !
I recall a previous unlisted managed fund that I owned whose unit price finished not much higher for the
financial year and yet the end of year tax statement issued me capital gains of $8000 which I then
had to enter on my tax return......great...
so I would choose an ETMF that has low turnover.

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I have been burnt the exact same way... bought into a managed fund less than 4 weeks before financial close.

I wonder why it's not more widespread knowledge about investing in unit trusts in the latter stages of the tax calendar.

I pretty much bought a tax liability. Great way to give away your hard earned.

Such a rude shock.
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