How Future Generation Global Beat The MSCI Index By 6%

Future Generation Global Investment Co Ltd (ASX: FGG) has announced its full-year result to 31 December 2018.

Future Generation Global is a listed investment company (LIC) that provides shareholders with exposure to arguably perhaps the best Australian-based global fund managers without paying management or performance whilst donating 1% of net assets annually to charities primarily focused on youth mental health. Some of the charities it supports include Beyond Blue, Headspace, Reachout.com, Black Dog Institute, Butterfly, Sane Australia and Orygen.

What Future Generation Global Reported

The philanthropic LIC said that in 2018 its portfolio outperformed the MSCI AC World Index (AUD) by 5.9% with it increasing by 6.4% compared to the index’s return of 5.9%, despite 2018 being a year that saw many managers underperform.

Future Generation Global showed a pre-tax operating profit of $17.1 million and an after-tax operating profit of $12.8 million, which represented a 318.8% increase compared to 2017, although this can fluctuate significantly year to year.

In 2018 Future Generation Global made a $3.6 million donation to charities, which was up 20% compared to the 2017 donation of $3 million. Of the 2018 donation, $2.7 million was allocated to the designated charities and the remaining $0.9 million was contributed to other charities that had Australian deductible gift recipient status as nominated by shareholders with 1 million shares or more.

The 2019 donation is expected to be around $5 million, bringing the total invested since inception to $14 million.

Many of the service providers also provide their services for free. Total management and performance fees foregone by fund managers totalled $5.1 million and the value of the service providers, Board and Investment Committee totalled $0.7 million.

During the year, the company raised $127.9 million through a capital raising.

Future Generation Global Chairman Belinda Hutchison said: “FGG’s objectives are to provide shareholders with an attractive investment and a source of funding for Australian charities focused on youth mental health.

The Board is delighted to have delivered on both objectives in 2018, a significant increase in the Company’s assets and its charitable investment.”

Future Generation Global Dividend

Future Generation has again declared a fully franked dividend 1 cent per share, which is the same as last year. However, the Board is considering a dividend payment at the June 2019 result, depending on released profits from fund managers.

Future Generation seems like an attractive idea to me for both the philanthropy and the potential to outperform the global index. With many accomplished fund managers being part of its investments including Magellan, Antipodes and Cooper, it could be one to watch throughout the volatility.

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