AFIC gives new LICs a serve

Australian Foundation Investment Company chairman Bruce Teele claims the new externally-managed listed investment companies have been established to make their managers rich. Teele said the latest rash of LICs have high management and performance fees unlike the older, internally-managed vehicles which return all their profits to shareholders. Some new LICs charge a management fee of at least 1 per cent of funds under management in addition to market outperformance fees of 15 per cent or more. Internally-managed investment companies generally have management fees of 0.2 per cent or lower. AFIC reported an 18.6 per cent rise in net profit to $59.3 million for the first half. AFIC's return on its trading portfolio failed to match the ASX 200 Accumulation Index's 11.3 per cent return.