It would appear that a charitable wind is sweeping its way through Australian business circles at present. In the past few days billionaire James Packer in conjunction with casino operator Crown Resorts Ltd (ASX: CWN) announced plans to set up a $200 million charitable fund.
Packer’s announcement comes on the back of an exciting new venture – the Future Generation Investment Fund (ASX: FGX) – which is set to shortly list on the ASX. The FGIF is aiming to raise $200 million and it’s poised to be a veritable Win-Win for investors.
FGIF, which will operate under a listed investment company (LIC) structure, has enticed 14 of Australia’s top-performing fund managers to provide their services at no cost – that’s no management fee and no service fee. The driving force behind the creation of the fund is Mr Geoff Wilson who is best known for founding Wilson Asset Management, which is the investment manager behind WAM Capital (ASX: WAM). Not only will investors in FGIF gain access to Wilson AM’s services at no cost, but also access to the expertise of other leading managers as well, including Lanyon Asset Management, Cooper Investors and LHC Capital
By now you might be saying “OK, what’s the catch? There’s no such thing as a free lunch.” Well that’s true… to a degree. The FGIF charter will see it donate 1% of its assets each year to a range of children’s charities. In effect investors are being charged 1% per annum, however the beauty of this is the whole charge is donated to 13 Australian children’s charities.
A unique opportunity
Investors in Australia’s oldest and largest LICs such as Argo Investments Limited (ASX: ARG) have long enjoyed the lowest of management fees and no performance fees. In contrast, many of the younger and smaller LICs are structured with external managers that charge on average around 1.3% in management fees, plus around 17% in performance fees.
Investors know that fees reduce their returns, so the opportunity to access high quality managers with a history of outperforming the market, without having to pay the high fees is certainly an appealing opportunity. What’s more, many of these 14 leading managers are not easily accessible to individual investors making FGIF a rare opportunity to access their investing capabilities.
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