A Socially Good Investment

Geoff Wilson is launching his second philanthropic managed fund, this time giving people the chance to invest alongside some of the best global fund managers.

Key Points

  • Focussed on long-term capital growth
  • Access to well-regarded global fund managers
  • No management or performance fees

Typically, when one examines a prospectus a host of problems jump off the page. What makes the Future Generation Global Fund (FGG) offer so special is that it’s difficult to find anything to actually dislike. This is a great idea, where supporting a worthy cause doesn't come at the expense of returns.

The Future Generation Global fund is the latest dual-objective listed investment company from industry veteran Geoff Wilson. FGG aims to generate long-term capital growth for investors whilst supporting charities like Headspace and Black Dog Institute, devoted to assisting people with youth mental illness. In our view, FGG should achieve both objectives, without one coming at the expense of the other.

Geoff Wilson launched the Future Generation Investment Company (ASX:FGX) in September 2014, which was focussed on local equities whilst supporting 14 charities aimed at supporting kids, including Youth Off the Streets and Kids Helpline. FGX was fully subscribed and counted Andrew ‘Twiggy’ Forrest and Solomon Lew as shareholders. That experience will come in handy as the international fund attempts to raise $550 million, which would make it the largest float of a listed investment company in Australia.

Details

So, what’s the proposition? If you were to invest in the funds directly you would be liable for a management fee of approximately 1.3% and performance fees of approximately 17%. Instead, FGG isn’t charging a management or performance fee but will donate 1% of the fund’s net asset value to the charities it supports. 

The 17 participating funds are all well-regarded, actively managed stock pickers with a value investing focus. They include Magellan Asset Management, whose fund has returned 11.98% p.a since inception and Ellerston, whose fund has returned 13% p.a since inception. Another is IronBridge Capital which manages approximately $2.7bn and who would usually have a minimum investment of $100,000. Moreover, several are traditional wholesale only funds which wouldn't usually be offered to retail investors.

FGG will give investors access to different strategies (long equities, absolute bias and quantitative) as well as stocks of differing market caps and geography. You can find a full list of participating funds here or on page 25 of the prospectus.

Allocation of capital between the funds has been tasked to the FGG investment committee whose members, including Geoff Wilson, all have over a decade of experience in the financial services industry.

Risks

As with all listed investment companies, the main risks are linked to the performance of the underlying investments. Also, the company has stated they have no intention to enter into any hedging agreements so any adverse foreign exchange movements will have an effect on the total value of the portfolio.

Investors in the float will need to purchase a minimum of 2,000 shares ($2,200). Anyone who wants to purchase more than 2,000 shares will need to do so in bunches of 100. The shares will be priced at $1.10 and will also include an option that gives the holder the right to purchase an additional share for $1.10. If the offer is fully subscribed, the price implies a premium of 1% over the fund’s net asset value. The offer will close on August 28 and FGG is set to list on the ASX on September 10.

The required forms can be found in the company’s prospectus. If paperwork isn't your thing, then you could wait until the company is listed on the ASX where you can feel free to buy and sell as you choose. Be wary though that if you choose to wait until after listing, you could find yourself purchasing units at a higher price.

There is a lot to like about FGG. Investors can avoid the hassles of setting up separate international brokerage accounts, dealing with foreign exchange, different time-zones and also potential taxation consequences of direct international investment. The fund itself will give exposure to a diverse range of experienced global value focused investment funds and offers the additional benefit of knowing you will do some good for society at the same time. You can't say fairer than that.

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