Staying ahead of the retiree Income LIC shakeout, page-17

In my humble opinion, the investor interest in ‘income’ LICs (big dividend payers) stems from people who probably retired (or made redundant, body gave up etc) with not quite the nest egg they might have hoped for. This then puts them in the position where they need to make their money work harder for them….ie generating outsized income returns for the capital they’ve invested.

I prefer to stick with big LICs that don’t attract this sort of dividend hungry investor. These ‘low stress’ LICs don’t have to constantly chase their tails to generate trading income, in order to support a large dividend . They simply buy and hold a portfolio of quality stocks, with minimal turnover, and pass the dividends they receive through to their shareholders (and don’t charge a bomb in fees either). Very unexciting, but very consistent. (But not meeting the needs of the yield hungry investor)

ETFs have their place as well in my view , especially the ones that can offer a point of difference to compliment your core LICs (eg an Indian ETF or a cyber security ETF). But I don’t think ETFs are the go if you’re relying on a regular, dependable, fully franked dividend.

Different products…
Different needs…
Different people…