Whitefield Limited: A Listed Investment Company

Listed investment companies, like unlisted managed investment funds, provide investors with exposure to a managed portfolio of investments.

• (a)
  Exposure to Underlying Investments: By purchasing a share in a listed investment company, an investor obtains exposure to a diversified portfolio of investments held by the company.
• (b)
  Company Structure: Listed Investment Companies are "companies" with a fixed number of shares on issue at any one point in time, and shareholders are the underlying investors in the company.
• (c)
  Buying and Selling Shares: Shareholders make or redeem an investment in a listed investment company by buying or selling shares in the listed investment company through a stockbroker.
• (d)
  Company Tax: Listed investment companies are taxed at company rates on their income and capital gains, but may pass on the benefit of the tax credit for tax paid to shareholders via the payment of franked dividends.
• (e)
  Transparency of Future Tax Liabilities: Listed investment companies calculate and report the capital gains tax that would be payable on all capital gains made whether realised or unrealised. (This is an important difference to a Managed Fund or ETF where investors are not aware of the potential capital gains tax liabilities that may exist on unrealised capital gains in the managed investment fund or ETF).
• (f)
  Share Price: The market price at which a share in listed investment company may be bought or sold is primarily determined by the underlying value of the net investments (or asset backing) of the company. Accordingly listed investment companies disclose the underlying Net Asset Backing per ordinary share to the ASX every month. The market price of a listed investment company share however, may also be influenced by additional factors including:

• • (i)
    the number of buyers and sellers of the company’s shares at a point in time and the volume of shares to bought and sold;
  • (ii)
    the relative cost efficiency of the company’s management expenses;
  • (iii)
    expectations of future earnings, capital growth, company tax and dividends;
  • (iv)
    company tax payable in future periods on capital gains made by the investment company.