Global listed investment company (LIC) Future Generation Global Invstmnt Co Ltd (ASX: FGG) reported its 2019 financial result to investors on Friday.
Future Generation Global's FY19 result
The philanthropic LIC, which donates 1% of its net assets to youth mental health charities each year, reported that its total comprehensive income grew to $66 million due to the strong capital growth from its fund managers who invest Future Generation Global's capital at no cost to shareholders, in other words they don't charge management fees.
In 2019 the LIC generated an operating profit before tax of $13.1 million and operating profit after tax of $8.6 million.
Future Generation Global's aim is to produce investment returns, so this may be a more appropriate measure of return. The investment portfolio increased 20.5% in the 12 months to 31 December 2019 with an average cash level of 11.5%. This compares to the 2019 return of 26.9% for the MSCI World Index (AUD). The performance was achieved with less volatility.
Whilst Future Generation Global wants to produce strong returns, it also wants investors to be exposed to a balanced and diversified portfolio with its cash and 'absolute return' allocations in addition to its 'long' allocations. That's how it outperformed the global index in each of the three months that the index return was negative in 2019.
During the year there was $7.8 million in savings from fees forgone by fund managers, service providers, directors and committee members. There was also $4.9 million invested in high-impact youth mental health focused charities. It's on track to deliver an annual donation of $5.9 million for 2020, bringing the total to an estimated $20 million.
Future Generation Global dividend
The Board of the LIC had already declared a dividend of 1.5 cents per share which was paid four months ago, this an increase of 50% compared to the 1 cent dividend per share in 2018.
What is the share price discount to the net tangible assets (NTA)?
The LIC releases its NTA every month to the market. Within January's update it was revealed that Future Generation Global was trading at a 16.6% discount to the share price on 13 February 2020. Since then the market has dropped 10% and Future Generation Global's share price has fallen 8.6%, so the NTA discount is still likely to attractively be in the mid-teens.
