Exchange traded managed funds, ETFs, LICs and mFunds … what’s the difference?

Many investment managers are looking to expand their product offering beyond traditional unit trusts. There are a range of exchange traded products available, each with strengths and weaknesses. Here’s a summary:

  • Exchange Traded Funds (ETFs) – ETFs are an open-ended trust structure that usually trade close to net asset value (NAV) across a spread. Traditionally ETFs are passively managed or index tracking funds. Third party market makers create liquidity by regularly issuing or cancelling units.
  • Exchange traded managed funds – also known as actively managed ETFs. These are open-ended trusts that issue and cancel units on a daily basis after the netting off of buyers and sellers. The fund can act as market maker and assist with liquidity.
  • Listed Investment Companies (LICs) – LICS are close-ended vehicles with a corporate structure. They rely on buyers and sellers in the market for liquidity, with no capacity to create or redeem units according to demand. LICs can trade at a discount or premium to their Net Asset Value (NAV).
  • mFunds – mFunds are unlisted managed funds issued and redeemed via the ASX operating rules and settled through participating Australian brokers. mFunds price at the end of trading rather than in real time.

So how do you choose which exchange traded product is the right one to add to your product suite? This depends on several factors, including:

  • client base you are looking to target
  • expected demand from investors and seed capital available
  • asset classes you will invest in and how the fund’s assets will be priced
  • fee structure
  • liquidity levels

If you are looking to launch an exchange traded product, FundBPO can help get your fund to market. We can calculate your daily NAV and portfolio composition file (PCF), look after your fund accounting and run your listed registry. Request a quick quote for more information.

Follow us on LinkedIn and Twitter to stay up-to-date on the latest market changes.


This article is information only and is not intended to be financial advice.  It does not take into account your individual objectives, financial situation or needs. While all efforts have been made to ensure the information contained in this article is accurate, errors may occur.

Want to know what we can do for your fund?

Submit Quote Request

Contact Mainstream Fund Services today to:

Operate more efficiently

Reduce time reconciling data

Have greater insights and make better decisions

Leverage scalable technology

Manage your regulatory reporting requirements

Reduce cost