Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 160

Reader question: Are managed funds or LICs better in super or out?

I have a very specific question that I would like one of your experts to answer. My question is about the difference in tax rules between managed funds and Listed Investment Companies and which is most appropriate inside or outside super. I read and understood the rules but I am still confused. There are products like Magellan Global, Platinum Global or Watermark Market Neutral Fund which have both a managed fund version and a LIC version. The managed fund version usually has stellar returns but higher tax would be payable; the LIC version usually has worse returns but would give lower tax and franking credits. Does that mean that managed funds are better in super and LIC are better outside of super? Thank you very much for your help. Kind regards, Laurent

Frank Casarotti, General Manager of Distribution at Magellan Asset Management, sets out the differences between these two investment structures. Magellan offers unlisted managed funds, listed 'Exchange Quoted Managed Funds' (EQMF) and a Listed Investment Company (LIC), and there is a video in our Sponsor Noticeboard further explaining the differences.

Reply from Magellan:

It’s difficult to comment on whether managed funds or LICs are more suitable inside or outside super. It really depends on the investor’s preferences (e.g. non-tax features of the product, cash distribution or dividend reinvestment plan (DRP), frequency of distributions, asset classes, franking credits or not, etc.).

Here is a table highlighting the major differences.

Frank Casarotti is General Manager of Distribution at Magellan Asset Management. This is general information only and does not consider the circumstances of any investor.

If you'd like to read more about LICs and managed funds, check out these Cuffelinks articles.

 

RELATED ARTICLES

Is Magellan's listed fund a game changer?

Here's what should replace the $3 million super tax

Less than 1% of wealthy families will struggle to pay super tax: study

banner

Most viewed in recent weeks

Are LICs licked?

LICs are continuing to struggle with large discounts and frustrated investors are wondering whether it’s worth holding onto them. This explains why the next 6-12 months will be make or break for many LICs.

Retirement income expectations hit new highs

Younger Australians think they’ll need $100k a year in retirement - nearly double what current retirees spend. Expectations are rising fast, but are they realistic or just another case of lifestyle inflation?

Welcome to Firstlinks Edition 627 with weekend update

This week, I got the news that my mother has dementia. It came shortly after my father received the same diagnosis. This is a meditation on getting old and my regrets in not getting my parents’ affairs in order sooner.

  • 4 September 2025

5 charts every retiree must see…

Retirement can be daunting for Australians facing financial uncertainty. Understand your goals, longevity challenges, inflation impacts, market risks, and components of retirement income with these crucial charts.

Why super returns may be heading lower

Five mega trends point to risks of a more inflation prone and lower growth environment. This, along with rich market valuations, should constrain medium term superannuation returns to around 5% per annum.

Super crosses the retirement Rubicon

Australia's superannuation system faces a 'Rubicon' moment, a turning point where the focus is shifting from accumulation phase to retirement readiness, but unfortunately, many funds are not rising to the challenge.

Latest Updates

Investment strategies

Why I dislike dividend stocks

If you need income then buying dividend stocks makes perfect sense. But if you don’t then it makes little sense because it’s likely to limit building real wealth. Here’s what you should do instead.

Superannuation

Meg on SMSFs: Indexation of Division 296 tax isn't enough

Labor is reviewing the $3 million super tax's most contentious aspects: lack of indexation and the tax on unrealised gains. Those fighting for change shouldn’t just settle for indexation of the threshold.

Shares

Will ASX dividends rise over the next 12 months?

Market forecasts for ASX dividend yields are at a 30-year low amid fears about the economy and the capacity for banks and resource companies to pay higher dividends. This pessimism seems overdone.

Shares

Expensive market valuations may make sense

World share markets seem toppy at first glance, though digging deeper reveals important nuances. While the top 2% of stocks are pricey, they're also growing faster, and the remaining 98% are inexpensive versus history.

Fixed interest

The end of the strong US dollar cycle

The US dollar’s overvaluation, weaker fundamentals, and crowded positioning point to further downside. Diversifying into non-US equities and emerging market debt may offer opportunities for global investors.

Investment strategies

Today’s case for floating rate notes

Market volatility and uncertainty in 2025 prompt the need for a diversified portfolio. Floating Rate Notes offer stability, income, and protection against interest rate risks, making them a valuable investment option.

Strategy

Breaking down recent footy finals by the numbers

In a first, 2025 saw AFL and NRL minor premiers both go out in straight sets. AFL data suggests the pre-finals bye is weakening the stranglehold of top-4 sides more than ever before.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.