Hi Sim,
I was just about to start investing substantally in ETFs. Personally putting them in with warrants has turned me off them. I don't ever trade warrants and derivitives which I think you have to completed a separate application for stating that you understand the risks involved. So I assume now that if you want to trade/invest in ETFs the warrant application will have to be completed.
I assume they may also put LICs into this group at a later date? I do own various LICs and would be very unhappy with such a change.
Anyhow this in my mind is really stupid. Very conservative investors are put off anything that is lumped in with derivitives area. Hence new investors may avoid ETFs more so after this change.
Add to this that there is an upcoming major tax review don't be surprised if LICs lose their CGT discount due to the fact that they use a company structure. This happened after the Ralph Review and LIC share prices plummeted. However Costella stepped in to reverse the change due to pressure from the major LIC lobby groups. The ATO was far from happy as it created unnecessary complexity for a discrete group of companies. One can't count on Labour stepping in like Costella did if LICs were to once again treated like all other companies in the future.
So given these issues I'm tempted to go back to investing directly in individual stocks. Major banks and other blue chip dividend paying stocks form a major holding of the large LICs anyhow.
Some more info on the ETF migration is found here:
https://www.asxonline.com/intradoc-c...asx_020873.pdf
Cheers - Gordon
Last edited by austini : 21-05-2008 at 05:00 PM.
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