Wealth: Future Generation Investment Fund

|The Australian|Andrew Main

Media

WHAT IT IS: It’s a listed investment company being launched by Geoff Wilson of Wilson Asset Management, with zero performance fees and management fees and the aim of donating 1 per cent of assets to children’s charities every year.

WHAT IT DOES: Like most other LICs, it invests in Australian companies. What makes it different is that it’s raising money for charities, and the ever-persuasive Wilson has lined up a number of fund managers prepared to do their side of the job for no fee. It’s not a million miles in style from Chris Cuffe’s Third Link Growth Fund, which he started in 2008 and which to date has handed over more than $2 million to a range of six charities. It’s quite a canny system, given there’s a win in this for everyone: the investor sees lower costs and a worthy cause, the fundy gets kudos for doing it pro bono, and the charities are of course happy recipients.

WHAT WE LIKE: As long as investors know there’s 1 per cent going out of the door annually and the performance stacks up, it’s well worth it. Wilson’s been running LICs since he had hair and there’s no doubt LICs are a valid vehicle as long as their price doesn’t drop to a significant discount below net tangible asset value.

WHAT WE DON’T LIKE: LICS are at the whim of the market in that more of them trade below their NTA than above it, although the more experienced managers tend to eliminate that discount over time.

THE OFFER: The fund is aiming to raise up to $200m at $1.10 per share, with a free option attaching, to list in due course with the stock code FGX. The offer opened during the week and is expected to close on September 3. It’s not dependent on raising the full amount, although it could well do so.