Michael Malseed: Like all investments these things are cyclicals. So, what we've seen in the last sort of three to four years is renewed liquidity in the capital markets and renewed interest in investment as a whole.

So, the listed investment market has taken advantage of that and we've seen a lot of IPOs come to market and a lot of capital raising among existing listed investment companies. So, in total, around $3 billion has been raised since 2013.

The popularity from the investors' side has come mainly from the ease of access to these investments. So, they can be traded through an online broking account or through a traditional stock broker. So, this has appeal to individual investors and also self-managed superannuation funds which are obviously a growing part of the market.

So, a listed investment company is a professionally-managed fund by an investment manager listed on the ASX. The other alternative for a professional manager of money could be to have a unit trust. They go down the listed company path because they can raise a significant amount of capital in one go through an IPO.

So, they could raise $100 million, $200 million in one go as opposed to raising money slowly through a unit trust. So, when investors have demand for this type of product it's quite appealing for investment managers to use, tap into this capital and raise that money quickly. So, that's one of the reasons why we've seen a lot coming to market because it's tapping into that investor demand.

As with any professional investment manager, the quality of the manager and their ability to generate adequate returns or superior returns for you is first and foremost important. So, that's the same as with the unit trusts or any other type of investment.

Uniquely to a listed investment company is how they trade on the ASX. Shares in a listed investment company trade on the ASX and it's the meeting of willing buyers and willing sellers to trade at a price.

Ideally, it should trade at the net tangible assets of the fund or the value of the investments in the fund. But often due to a lack of liquidity in the market the price traded on the ASX can be quite different. And that's when we talk about a share price being at a discount or a premium to NTA.

We've looked historically at the data. Typically, larger and more liquid LICs that are more established would trade closer to NTA.

Some listed investment companies can trade at a big premium if there's a lot of new investor demand into the fund and existing shareholders aren't willing to sell at a price. So, popular LICs can trade at a premium.

Investors should be aware they are paying over the net tangible assets of the fund, so there's a risk that if that premium unwinds at any time then they could bear losses associated with that or that could eat into any gains that the fund makes in NTA.

Often LICs below a market cap of $300 million with limited liquidity can trade at quite sizable discounts and those discounts can widen over time, particularly during periods of market stress.

So, that's an important consideration for investors. That information is available on Morningstar's website. We produce a monthly report. The listed investment companies publish their net tangible assets at the end of every month and we provide a report showing the share price relative to their NTA, so you can see how far out of the market some of these LICs are trading at.