AI assistant
FUTURE GENERATION AUSTRALIA LIMITED Regulatory Filings 2021
64916_rns_2021-01-13_8e1df916-718d-4626-b285-ac0944ea5b9e.pdf
Regulatory Filings
Open in viewerOpens in your device viewer
INVESTMENT & SOCIAL RETURNS
December 2020 Investment Update
Dear Fellow Shareholder.
Investment Portfolio Outperformance
In 2020, both the Future Generation Australia (ASX: FGX) and Future Generation Global (ASX: FGG) investment portfolios delivered strong investment portfolio performance. FGX increased 10.0%*, outperforming the S&P/ASX All Ordinaries Accumulation Index by 6.4%. FGG increased 14.3%*. outperforming the MSCI AC World Index (AUD) by 8.2%.
In December, the FGG investment portfolio outperformed the MSCI AC World Index (AUD), with the investment portfolio increasing 1.3%* during the month while the Index increased 0.1%. The FGX investment portfolio increased 1.7%* while the S&P/ASX All Ordinaries Accumulation Index rose 18%
Since inception, the FGX investment portfolio has increased 9.6%* per annum and the FGG investment portfolio has increased 11.0%* per annum. outperforming their respective benchmarks. The investment portfolios' outperformance has been achieved with less volatility than their indexes, as measured by standard deviation.
We are incredibly grateful to Future Generation's fund managers for their outstanding generosity that allows us to support and invest in our charity partners each year. I would like to thank our fund managers for their collective outperformance that drove an increase in both the fully franked dividends and donations in 2020 for both FGX and FGG, and our shareholders for their continued support of the Future Generation companies.
EL&C Baillieu selects Future Generation Australia as its top pick again
Future Generation Australia was once again selected by EL&C Baillieu as its top pick in its monthly listed investment companies update. The stockbroker highlighted Future Generation Australia's unique feature that provides "access to some of Australia's most successful investors" and the social investment the company makes every year.
Conversations with Future Generation podcast
Season one of Conversations with Future Generation recorded nine episodes in 2020 with amazing Australians who are leading the way in the worlds of investing, philanthropy, mental health, and supporting children and youth at risk. We look forward to bringing vou season two from February.
In case you missed it, I was joined by Paradice Investment Management Founder and Managing Director David Paradice AO for our final podcast episode of 2020. The episode was covered by the Australian Financial Review.
Kind regards.
Louise Walsh Chief Executive Officer
"Investment portfolio performance and Index returns are before expenses, fees and taxes.
$$41.2m$
SOCIAL
TO 2020
INVESTMENT
\$4.8m
$$5.7m$
Future Generation Australia 2020
Future Generation Global 2020
2020 total social investment
\$10.5m
2020 annualised management fees, performance fees and services forgone
Total annualised fees forgone since inception to 2020
\$69.6m
Investment portfolio performance
| Net tangible assets before tax |
Gross assets | Investment portfolio performance $(pa)$ since Sept 2014) |
|---|---|---|
| 132.32c | \$532.3m | 9.6% |
| Net tangible assets after tax and before tax on unrealised gains |
Market capitalisation # |
Volatility 11.8% |
| 132.40c | \$500.4m | S&P/ASX All Ordinaries Accumulation Index: 14.9% |
| Net tangible assets after tax |
Annualised fully franked interim dividend yield # |
Dividends paid since inception (per share) |
| 126.80c | 4.2% | 24.7c |
Based on the 31 December 2020 share price of \$1.25 per share and the annualised fully franked interim dividend of 5.2 cents per share. Future Generation Australia has 400,343,988 shares on issue. "Volatility is measured by standard deviation.
| Investment portfolio performance at 31 December 2020 |
mth | 6 mths |
vr | 3 yrs % pa |
5 yrs % pa |
этсе inception % pa $(Sept-14)$ |
|---|---|---|---|---|---|---|
| Future Generation Australia | 1.7% | 18.4% | 10.0% | 8.5% | 92% | 9.6% |
| S&P/ASX All Ordinaries Accumulation Index |
1.8% | 157% | 3.6% | 7.4% | 9.3% | 7.5% |
COLLA
Investment performance and Index returns are before expenses, fees and taxes
Fund manager allocations
0% management fees 0% performance fees
During the month, Future Generation Australia exited its holding in the LHC Capital Australia High Conviction Fund.
Investment portfolio performance
Fund manager allocations
0% management fees 0% performance fees
| Net tangible assets before tax |
Gross assets | Investment portfolio performance (pa since Sept 2015) |
|---|---|---|
| $162.48c*$ | \$641.6m | 11.0% |
| Net tangible assets after tax and before tax on |
Market capitalisation# |
Volatility** |
| unrealised gains 162.74c |
\$589.4m | 9.1% MSCI AC World Index (AUD): 10.7% |
| Net tangible assets after tax |
2020 fully franked dividend |
ESG aware ^ (of the portfolio) |
| 150.49c | 2.0c | 98.8% |
"The NTA before tax figure is after the payment of \$7.3m (1.85 cents per share) in tax during the month in relation to the 2020 income tax year.
Based on the 31 December 2020 share price of \$1.50 per share and 392,947,106 shares on issue.
"Volatility is measured by standard deviation.
"Based on the 2019 Annual Report.
| Investment portfolio performance at 31 December 2020 |
mth | 6 mths |
vr | 3 yrs % pa |
Since inception %pa (Sept-15) |
|---|---|---|---|---|---|
| Future Generation Global | 1.3% | 13.9% | 14.3% | 13.6% | $11.0\%$ |
| MSCI AC World Index (AUD) | 0.1% | 11 $0\%$ | 6.1% | $10.6\%$ | 10.2% |
$C2$
Investment performance and index returns are before expenses, fees and taxes.
During the month, Future Generation Global made an additional investment of \$13.1 million in the VGI Partners Fund.
Fund manager in focus:
Future
Generation Global
About Munro Partners
Munro Partners is a global investment manager with a core focus on growth equities. Established in 2016 by an award-winning investment team with a 15-year proven track record of strong returns, the business has over \$3 billion in assets under management and is owned and controlled by key staff. Via their proprietary investment process, Munro Partners invests alongside their clients to benefit from some of the key structural changes that occur in the world today. The business is Australian domiciled, with its head office based in Melbourne
About Munro Global Growth Fund
Munro Partners manages the long/short absolute return mandate: the Munro Global Growth Fund. Index-unaware, aiming for meaningful absolute returns through the investment cycle, while maintaining a capital preservation mindset, Munro's flexible investment mandate allows it to dynamically manage its market exposure and its currency exposure to protect clients' capital and to enhance the long-term returns of investments.
Munro Partners: Munro Global Growth Fund
Our investment style
Munro Partners identifies sustainable growth trends that are under-appreciated, not well understood and mispriced by the market, and the resulting winning and losing stocks. The philosophy is based on three overriding principals: earnings growth drives stock prices; sustained earnings growth is worth more than cyclical earnings growth; and the market will often misprice growth and its sustainability.
The investment process generates a high hit rate of performing ideas and allows them to be appropriately sized and monetised over long time periods.
Our market outlook
2020 changed the way people live their lives. Munro Partners anticipates that habits formed during the pandemic will likely stick in 2021 as the world continues to transition to new ways of shopping, working, learning, consuming, entertainment and paying. Areas such as digital enterprise, digital payments and e-commerce should continue to deliver strong upcoming earnings results and provide bullish outlook statements. These new behaviours have created structural changes and consequently, accelerated growth in many of these areas.
Munro Partners Munro Global Growth Fund
Further, Munro Partners will also look to "follow the money". With a backdrop of ultra-low interest rates and worldwide quantitative easing, the case for equities rather than bonds currently remains strong. In addition, with further investments in renewables, batteries, transport and energy efficiency from the European Union and a Biden-led presidency, we believe climate as an area of interest has strong tailwinds.
The major near-term risk to Munro Partners' broadly positive outlook remains to be the coronavirus. While vaccines are on the way, Munro Partners thinks equity markets will, for the most part, look through lockdowns as most large companies have the wherewithal to survive and make it through to the other side. Where the coronavirus would become a greater concern would be if there were to be any material setbacks in the roll-out of vaccines (for example, loss of public trust and distribution issues).
Why we support Future Generation
Munro Partners is pleased to be able to support Future Generation's designated charities as it aligns with Munro Partners' adherence to Environmental, Social and Government (ESG) considerations at fund, partnership and personal levels.
| $\mathbf{A}$ Performance at 31 December 2020 |
mths | V | 2 vrs % pa |
3 vrs % pa |
Since inception %pa (Aug-16) |
|---|---|---|---|---|---|
| Munro Global Growth Fund | 18.2% | 40.6% | 25.7% | 17.4% | 15.5% |
Investment returns are net of management costs and assume distributions have been reinvested
For more information, visit munropartners.com.au
The Future Generation companies provide exposure to leading Australian and global fund managers.
Charity in focus:
About the ACMF
The Australian Children's Music Foundation (ACMF) provides free, long-term music classes and instruments to disadvantaged children to inspire creativity, nurture self-esteem and improve educational outcomes. Since inception, ACMF has provided over 233,500 free music lessons, donated over \$1 million worth of musical instruments and received over 27,000 entries in the ACMF National Songwriting Competition.
Read a Q&A with Founder and CEO of ACMF, Don Spencer OAM here.
The ACMF and Future Generation
In 2020, ACMF was able to deliver music programs to over 1,000 disadvantaged children each week in both New South Wales and Victoria. The support of Future Generation Australia has enabled ACMF to continue the National Schools Songwriting Competition which has received 35,000 entries to date, and funded regional music programs to bring families, communities and schools together through concerts and performances.
For more information, visit acmf.com.au
Our designated charities
Fund manager
allocation and investments at market value as at 31 December 2020
| Fund Manager | Investment | Strategy | % of Gross Assets |
|---|---|---|---|
| Bennelong Australian Equities Partners | Bennelong Australian Equities Fund | Long equities | 14.3% |
| Mid Cap/Long Short Equities Funds (split out below) | 11.3% | ||
| Paradice Investment Management | Paradice Australian Mid Cap Fund | Long equities | 6.5% |
| Paradice Long Short Australian Equities Fund | Absolute bias | 4.8% | |
| Regal Funds Management | Regal Australian Long Short Equity Fund | Absolute bias | 10.6% |
| Small/Emerging Companies Funds (split out below) | 7.4% | ||
| Eley Griffiths Group | Eley Griffiths Group Small Companies Fund | Long equities | 6.1% |
| Eley Griffiths Group Emerging Companies Fund | Long equities | 1.3% | |
| Wilson Asset Management | Wilson Asset Management Equity Fund | Absolute bias | 6.2% |
| Long Short/Australian Equities Funds (split out below) | 5.8% | ||
| L1 Capital | L1 Capital Long Short Fund | Absolute bias | 3.4% |
| L1 Capital Australian Equities Fund | Long equities | 2.4% | |
| Cooper Investors | Cooper Investors Australian Equities Fund | Long equities | 5.5% |
| Sandon Capital | Sandon Capital Activist Fund | Absolute bias | 5.2% |
| Absolute Return/High Conviction Funds (split out below) | 4.5% | ||
| Firetrail Investments | Firetrail Absolute Return Fund | Market neutral | 3.5% |
| Firetrail High Conviction Fund | Long equities | 1.0% | |
| Bennelong Long Short Equity Management Bennelong Long Short Equity Fund | Market neutral | 4.1% | |
| CBG Asset Management | CBG Asset Australian Equities Fund | Long equities | 2.6% |
| Tribeca Investment Partners | Tribeca Alpha Plus Fund | Absolute bias | 2.5% |
| Vinva Investment Management | Vinva Australian Equities Fund | Long equities | 2.5% |
| Sage Capital | Sage Capital Equity Plus Fund | Absolute bias | 2.1% |
| Centennial Asset Management | The Level 18 Fund | Absolute bias | 2.0% |
| Smallco Investment Manager | Smallco Broadcap Fund | Long equities | 1.7% |
| QVG Capital | QVG Opportunities Fund | Long equities | 1.3% |
| Lanyon Asset Management | Lanyon Australian Value Fund | Absolute bias | 1.1% |
| Cash and term deposits | 9.3% |
Fund manager
allocation and investments at market value as at 31 December 2020
| Fund Manager | Investment | Strategy | % of Gross Assets |
|---|---|---|---|
| Caledonia | Caledonia Fund | Long equities | 12.5% |
| Magellan Asset Management | Magellan Global Fund | Long equities | 11.4% |
| Cooper Investors | Cooper Investors Global Equities Fund (Unhedged) | Long equities | 11.3% |
| Marsico Capital Management | Marsico Global Fund | Long equities | 9.4% |
| Nikko Asset Management Australia | Nikko AM Global Share Fund | Long equities | 9.2% |
| VGI Partners | VGI Partners Funds | Absolute bias | 8.0% |
| Munro Partners | Munro Global Growth Fund | Absolute bias | 6.8% |
| Antipodes Partners | Antipodes Global Fund - Long | Long equities | 6.5% |
| Ellerston Capital | Ellerston Global Mid Small Cap Fund | Long equities | 5.7% |
| Avenir Capital | Avenir Global Fund | Absolute bias | 3.3% |
| WCM Investment Management | WCM Quality Global Growth Fund (Hedged) | Long equities | 3.1% |
| Paradice Investment Management | Paradice Global Small Mid Cap Fund (Unhedged) | Long equities | 3.1% |
| Morphic Asset Management | Morphic Ethical Equities Fund Limited | Absolute bias | 0.9% |
| Cash and term deposits | 8.8% |