LIC & LIT LICs management fees - how, what, when, where?

can someone please explain to me how LIC management fees are calculated, paid, and when they're charged? are they paid via deduction to your dividends or holdings? are they paid annually? and if so when? after eofy or is it on the anniversary of your investing in a LIC?

have been reading lots but haven't been able to find these details, thanks in advance

 

How does cba pay their ceo? Maybe read about how shares work first.

 

ok, here's a scenario.
I invest 120k in BKI today.
they have a management fee of 0.10% which translates to $120 per year.
do I pay them $10 a month, $30 per quarter, $60 every 6 months (when they pay dividends), or $120 in one go at tax time or some other annual date?
and then how do I pay them? does it come out of my holdings that I have with them or am I billed for it separately? or do they just deduct it from my dividends?

or am I completely missing something like every LIC is different and it could be any combination of the above?

 

I believe its taken out of the NTA of the fund? Happy to be corrected

 

Those 1/1000 of a share fees make your tax guy cry.

 

Different LICs have different fees and expenses which are a cost to the company at different times (calculated daily/paid monthly etc). The company will pay its costs from its assets - such as cash - which should be covered (easily) by revenue (to allow dividends/further asset purchases), if costs are greater than cash the company will have to sell assets or borrow to pay expenses.

Look at quarterly and annual reports/presentations if you want some more information;
https://bkilimited.com.au/investment/wp-content/uploads/2018/04/bki-quarterly-report-1-2018.pdf
https://bkilimited.com.au/investment/wp-content/uploads/2018/01/1760699.pdf

Perhaps 0.10% shouldn't be your concern. Better things to waste your time on unless you are some kind of weird person that likes to read financial statements and policies.

https://bkilimited.com.au/about-us/corporate-governance/

Any cost or dividend is going to reduce NTA

 

May I suggest you download the relevant annual reports for the LIC's in which you are interested and examine the Consolidated Cash Flow Statement and then any Explanatory Notes, such as Management Costs. After reading a few of those should give you a handle on where the money is going. Following that, you can have fun doing percentages, etc. Kept me occupied on cold winter's nights at one stage. The when isn't really relevant; it's how much.

 

great thanks for the replies everyone. I try to plan a few years ahead and like to know when moneys are going in and out. i'll read a few docs but i'm guessing it will all be clearer after i'm in the game and watch it over the course of a few months/years

 

In short ; A LIC is a company, it will pay its expenses from retained earnings or debt. Hopefully the former. You will not notice the clip

 

Perfect, thanks! Now on to worrying about buying at the right time and bill shortens tax plan

 

Real world scenario:
You buy $120k of BKI - NTA for your parcel is $120k (IE you buy at NTA). In the space of a year, the NTA price of shares in BKI's portfolio goes up in total of management fee which for you is $120. At end of year, NTA is exactly the same as when you bought it, even though shares went up ever do slightly as this was subtracted, share price is who knows where but in line with investor sentiment.

Basically, you don't see the MER come out but it is calculated within the NTA.