Should you buy Future Generation Global Investment Company (FGG)?

Should you buy Future Generation Global Investment Company (FGG)?

The good people behind Future Generation Investment Company (FGX) – a holding of our Rivkin Local live Model Portfolio – are launching a ‘Global’ listed investment company (LIC), once again with the dual mandate of providing investors with great returns and helping support underfunded charities with regular income.

Here’s the offer in a nutshell:

  • Fund of funds structure, within a LIC – so it’ll trade on the ASX boards just like any other LIC
  • Ultra-low expense ratio, due to the high level of pro bono services being provided
  • ‘Fees’ consist of the annual 1% donation to select youth mental health charities – this is a tax deduction to the LIC, so it’s a dirt cheap offer
  • Aiming to raise a maximum of $550 million, with further scope to extend the pool of capital from the exercise of the free one-for-one option
  • Applicants will pay $1.10 per FGG share, with a free option (FGGO), exercisable at $1.10 on or before 15 September, 2017
  • The LIC’s investment committee will allocate funds to selected global fund managers, at this stage including: Magellan, Ellerston Capital, Manikay Partners, VGI Parters, Antipodes, Neuberger Berman, Paradice – click here and see the fact sheet for more
  • CEOed by Chris Donohoe on the investment side and Louise Walsh on the philanthropic side – see their bios on page 59 of the prospectus or visit https://www.youtube.com/user/RivkinSecurities to watch our interviews with them
  • Overseen by Geoff Wilson and Wilson Asset Management – experts in the LIC space, and while he’s a big donor to charity, Geoff’s one of the tightest guys I know – I don’t think he’ll be offended by that, I’m basically saying that there will not be a cent wasted in expenses within these LICs.

So what’s Rivkin’s general advice on this stock? We know the people involved in running this company, it’s a cracking deal (at 1% per annum and a minuscule expense ratio it’s probably too good a deal) and it’s a nice way for those investors who are unsure of how to attack offshore equity markets to get diversified exposure to those markets. Keep in mind over three quarters of the funds that FGG will invest in normally charge performance fees, and all of their management and performance fees are being waived. It is a very cheap way to get into a diversified global fund of funds.

When considering the size of your application, you should consider that it will almost certainly be desirable to exercise the option before its expiry, so whatever amount you apply for, prepare to match that same amount again on or before September 2017.

How to apply

As was the case with Future Generation Investment Company (FGX), Rivkin will be working with its broking partner CMC Markets in donating the broker stamping fees to charities associated with the investment company’s cause – in this case, youth mental health and homelessness.

With this in mind, we strongly urge you to follow the following steps accurately so Rivkin can add to the philanthropic nature of this IPO.

  1. Visit http://www.futuregeninvest.com.au/Global/prospectus.pdf to download and read the prospectus
  2. IMPORTANT: complete the Broker Firm Application Form on page 87 of the prospectus, this way we can donate the stamping fees
  3. Ensure you have sufficient funds in your Rivkin Securities stockbroking account to pay for the stock
  4. Enter the Broker Code 02662
  5. Enter the Adviser Code 0001
  6. Email your application to customerservice@rivkin.com.au or post it to:

Rivkin Securities FGG Offer
Po Box 1524
Double Bay NSW 1360

Don’t have a Rivkin Securities stockbroking account? Open one now by emailing customerservice@rivkin.com.au (your Relationship Manager will call you back and pre-fill forms etc.) or phoning 1300 748 546. Our online brokerage is $11.00 or 0.11%, $9.90 or 0.11% for SMSFs that use Rivkin Super. PLUS we go the extra mile and donate non-core earnings like broking fees from this IPO to charity. You’re doing yourselves a favour and doing those in need a favour by getting involved.

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