The 94-year-old Australian Foundation Investment Company was the 12th most popular holding on the Pearler platform last year, indicating strong support from young investors.
Two listed investment companies with a combined 170-year history were among the top buys last year on Millennial-focused investing platform Pearler, as they try to loosen the grip of rival exchange-traded funds on the next generation of investors.
And, given many young people are investing relatively small amounts of money, he said many also endorse the cost-efficiency focus of many ASX LICs. “They’re nothing like the stereotype of high finance,” he added. Ian Irvine, chief executive of the Listed Investment Companies and Trusts Association, said that although ETFs continue to boom, LICs were starting to make inroads with this lucrative new customer base.“It demonstrates that these investors are willing to do their research and not be swayed by the fad or fashion of the moment,” said Mr Irvine, a 14-year veteran of the Australian Securities Exchange.
Although retirement may not be front of mind for many young investors, the benefits of compound interest and reinvesting dividends has become popular with some, Mr Irvine said, reflecting on the themes and conversations hosted on the Pearler website and social media channels.Mr Nicolaides said the popularity of LICs was particularly noteworthy given the sector is known for being frugal in its marketing expenditure compared with ETFs other funds management businesses.
Mr Driver said many new AFIC shareholders held fewer than 1000 shares, indicating they may be low-balance or newer investors. Historically, LICs have benefited from a tradition of shareholders gifting stock to children or grandchildren, introducing the structure to a new generation.But aside from inherited holdings, Pearler’s Mr Nicolaides suggested “social wealth” could be a factor in driving LIC popularity.