An investment can have a value on your statement without giving you immediate access to that money. Listed investments can generally be sold on an exchange, although the price you receive depends on the market. Unlisted investments may have withdrawal rules or set times when you can exit.
Neither label tells you everything. Before investing, you need to understand how the investment is valued, when you can sell or withdraw, and what might happen if you need the money earlier than planned.
How listed and unlisted investments differ
A listed investment trades on a stock exchange. Its market price can change throughout the trading day as buyers and sellers place orders. If you decide to sell, the price you receive depends on what another investor is willing to pay at that time.
For some listed funds, that market price can differ from the value of the assets the fund holds. A listed investment company, for example, may trade above or below the value of its underlying portfolio. A visible price therefore tells you what the investment is trading for, not necessarily what its underlying assets are worth.
An unlisted managed fund does not trade on an exchange. Instead, investors generally apply to the fund to buy units and request a withdrawal when they want to leave. The unit price is based on the value of the fund’s underlying assets, according to the fund’s valuation process.
That value may be updated less frequently than a listed market price, particularly where the assets themselves do not trade regularly. But a steadier-looking unit price does not necessarily mean the investment is less risky or that you can withdraw whenever you choose. Valuation frequency and access to money are separate questions.
What liquidity means in practice
Liquidity is about how readily you can turn an investment into cash. With a listed investment, you can usually place an order to sell during market trading hours. However, an order does not guarantee a sale at your preferred price. If few buyers are available, you may need to accept a lower price or wait.
Unlisted funds have different arrangements. Some allow regular withdrawal requests; others restrict access for a defined period. A fund may also delay or stop withdrawals under certain circumstances. The terms of the particular investment matter more than the broad “unlisted” label.
For example, if you expect to use money for a home purchase in two years, an investment that limits withdrawals may not fit that timeframe, even if its reported value appears stable. Equally, a listed holding may be easier to offer for sale, but its market price could be lower when you need the money.
What to check before investing
Before comparing potential returns, ask:
- How is the investment valued, and how often is that value updated?
- When can I sell or request a withdrawal?
- Could access be delayed, restricted or suspended?
- What price might I receive, and what fees could apply when I leave?
For a managed fund, check its product disclosure statement for withdrawal rights, risks and fees. Then consider those terms alongside your goals, your other investments and when you may need access to the money.
We can help you assess how an investment’s valuation and access arrangements fit your wider financial position. Contact us on +61 3 9087 1015 or [email protected].
This article provides general information only and does not take account of your personal circumstances. It is not personal financial advice.
