Future Generation Australia Limited (FGG) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Future Generation Full Year Results Webinar. My name is Caroline Gurney, I'm the CEO of Future Generation. And I really want to thank all of you for joining us. Before we begin, I'd like to acknowledge the Gadigal people of the Eora nation, the traditional custodians of this land and acknowledge the elders past and present of the lands on which you are sitting today. So today, it's going to be a little different from normal. We've had a very high level of interest from a number of our shareholders. So we decided to break the webinar into 2 sections. So for the first 45 minutes, we're going to be talking about Future Generation Global. And then we're going to move on to Future Generation Australia at 12:45. As always, we're looking forward to taking all of your question, and we've actually got a lot of question in. So if we don't finish them before 12:45, we'll continue to answer them afterwards until the very end. So we have Geoff Wilson, Future Generation Founder and he's dialing in from New York, so you can ask him about New York later. And we also -- we have 2 of our pro bono fund managers. So for the first section, we have David Allen from Plato. And then for the second section, our FGG Fund Manager, we have Blake Henricks from Firetrail. So you -- all of you -- I mean they're on at the moment. So they're going to be sharing their market insights, updating your reporting season and giving their stock picks. And I'm really delighted that we have Zoe Black from Happy Paws Happy Hearts, one of our incredible not-for-profits we support. And last time, a lot of you might have seen her, she was in Brisbane and she actually brought some of her puppies. And admittedly, people are more interested in the puppies than they were on listening to what we were doing. So I'm glad she's on the webinar now today. So we're working internally and externally to many of you and the team within Future Generation and Wilson Asset Management, what it really means to be a Future Generation shareholder. And a few weeks ago, we did an amazing event with Rotary in Sydney and it's [ very many ] members. And we're also going to be doing one in Melbourne as well. And the key takeaway was that being a Future Generation shareholder makes you both an investor and a philanthropist because you're investing with leading fund managers and getting financial returns they deliver. But at the same time, you're making such a real impact in the lives of young Australian. So the reason you get to do both of these things is because of the generosity of our fund managers. And today, we have people like David and Blake, who manage your money pro bono. They don't charge any of their usual management performance fees, and this means we can donate our net average assets to charities on your behalf without impacting your financial returns. So far, we have them donated an incredible AUD 75.8 million to Australian not-for-profits. But as we always say, we are first and foremost an investment vehicle. So let's turn now to performance of the company, starting with Future Generation Global, and Geoff and I am very happy to take photographs on this afterwards. So hopefully, you've all seen our full year results and read our annual report. So I'm actually not going to cover everything here. But I really want to touch on a few highlights. Overall, we delivered a solid investment portfolio performance and strong fully franked dividend yield from what as you can see from this slide, here are some of the Future Generation Global highlights. Plus 16.7% investment spent portfolio performance, with $0.072 per share fully franked, full year dividend. I'm not going to go through all the boxes because I think it's incredibly self-explanatory. But what I do want to say is when the Board and obviously Geoff Wilson is on the board, when they met in February, they agreed to increase fully franked final dividend of $0.036 per share. So our full year dividend is $0.072 per share and this represents a fully franked dividend yield of 5.6% and a grossed-up dividend yield of 8%, including franking credits, and that is really important to all of you. I think it's interesting to compare that to the average global equity market yield of 2% and the average U.S. equity market yield of 1.5%. So what you can see there is that we are paying significantly greater. So turning to performance. The FGG investment portfolio increased, as I said, by 16.7% for the year. And our investment committee has selected for you, leading global fund managers who have a very much a proven ability to outperform the market and those -- their peers over the long term and this has resulted in Future Generation Global having a more cat tilt up. I know we've talked about it again, but I think it's really important. So if you compare us to the MSCI, we do have a very low exposure to the 7 mega-cap companies, Apple, Microsoft, Amazon, Meta, Tesla, Alphabet, [ Leader ] as well. So these companies have really driven that performance of the MSCI and they have a loan contributed 40%. And that's something we'll come to talk to David about because I know some of you have questions. There's the slide on investment portfolio performance. And throughout 2022, the IC has really reintroduced an allocation to quantity strategies as well. So it's great that we have David here to talk with us. And we are going to go more into exactly what that means. So the IC really believe that we have selected fund managers who have very much a disciplined investment approach. They're focused on a company's fundamentals, their earnings growth and their valuation. And this will deliver for shareholders over the start, over the medium to long term. And already this year, we have got off to a good start. In January, we delivered returns of 4.5%. I think the other key deliverable for us, apart from dividend capital is that we have less risk than the market. Our volatility was 9.8% versus the MSCI of 10.8% less than global markets. The other thing that I also would like to briefly touch on and that gives you a lot of comfort is the profits reserve and that's very unique to the LIC structure. Future Generation Global has 6.8 years of dividend coverage for shareholders equates to $0.489 per share, and that's available in the profits reserve, which is continually working for you. It's not in a separate account, and this smooths out income returns to the shareholders over the long term. So I'm looking at the questions now, and they're coming in. And what I want to address is the discount to NTA and what we're doing about it. And we do have a few questions there. We can definitely go into more detail with that with Geoff. But what I want to reassure you is that it's something we're working extremely hard on. And we believe that there will be an expected improvement in the investment portfolio performance and coupled with target communication and marketing and our engagement strategy, this will meaningfully reduce share price discount to NTA. Either way we share your frustration about the discount to NTA, but we're also pleased to have delivered solid risk-adjusted investment portfolio performance and a strong fully franked dividend yield. Briefly, I'm going to go now to our social investment because this is something you, we -- we're very passionate about, and it's one of our key differentiators. So this year, Future Generation Global has donated AUD 5.4 million, sorry -- AUD 5.4 million to our social impact partners, and they've been focused on promoting well-being and preventing mental ill health in young Australians. So our total social investments since inception is now AUD 38 million. And this is made possible, not just because of the fund managers, but also because of our Board, our investment committee, our lawyers, our accountants, our auditors, et cetera, and they all waived their usual fees. The fees that have given amount to about AUD 9.9 million for last year 2023, and that's around 1.6% of the net assets of the company. So this money not -- doesn't just go to our impact partners, but it also works for you, our shareholders. So without further ado, I want to introduce you to one of our pro bono fund managers. We have David Allen from Plato. David, are you there? Hi.

Hi, Caroline. Thank you very much for having me on today.

So David, we're having quite a few questions coming for you. But I mean, I think one of the things is investors, shareholders, everybody is really nervous. Markets are hitting the fresh highs. How do you explain that? And what is your outlook for the rest of the year?

Yes, a really good question, yes. And I guess thinking about it what over the last 18 weeks, the S&P 500 has been up in 16 of those weeks. So pretty extraordinary, since the lows of COVID were up 144%. So yes, what I keep hearing from investors that they're long, they're staying long, but they're getting slightly uncomfortable. And that makes sense. Some people are drawing analogies to the tech bubble where irrational exuberance crept in and all fundamentals seem to guard the window. I think what's different, though, this time is that these are real companies with real earnings like look at NVIDIA, for example, they make the chips that make AI possible. They are now the third largest company in the world, but there's real revenue there. So the net profit for the quarter is over $10 billion. That's up 700% in a year. It's just phenomenal. So while in the tech bubble, there was a lot of hot air, there certainly may be some froth at the moment, but these are real companies making a real difference in the world.

So can you tell me exactly how do you invest? How do you describe your strategy?

Yes, sure thing. So our approach is global. So we're looking at the 10,000 companies across the world in developed markets. And -- that's an incredibly broad opportunity set and places us at a big advantage a manager who just can look at Australian stock. So Australia has got some great companies, but it's very focused on mining and financials, et cetera. It doesn't have a huge tech space, doesn't have a huge pharmaceutical space. So we take a global approach, and we'll look at any company in the world from, your Apple is right down to $100 million free float. So it's a very broad opportunity set. And what we're really looking for is companies that are great quality, that aren't too expensive, they have good sentiment, good tailwinds and critically an absence of big red flags that we need to be wary of.

So one of -- we have a question from Daniel about what high conviction businesses are you excited about? Maybe you could give us [ one ].

Yes, yes, sure thing. Okay, well, I think previously when I've spoken to Future Gen, we spoke about Danish company, Novo Nordisk, the Genius mines behind the anti-obesity drugs that are taking the world by storm. There's another pharma name in our portfolio at the moment that I think is very interesting, and it's called Vertex Pharmaceuticals and they have transformed the treatment for people and children with cystic fibrosis. Just 25 years ago, the life expectancy was 27 years for someone with the CF diagnosis. Now it's well into the 50s and a lot of it is due to medications. There's another drug on the horizon that's in late-stage development. And it's a treatment or it's a pain drug that's highly nonaddictive, works on the peripheral nervous system rather than the central and is almost as effective as opioids. We know in the U.S. how the opioid epidemic has laid waste to families and entire communities. And so this is a need that's crying out to be met. In the U.S. for every 100 Americans, there's 40 opioid prescriptions written each year. So if Vertex have what -- it appears they do, this is a game changer in the treatment of pain and can transform lives, which is fantastic.

So maybe you could also balance that in terms of what companies are you shorting at the moment?

So just for the view is that we also take short position. So we look at companies that we think are in very challenged environments. A short name that -- we were at the end of last year was Liontown. And so lithium producer, what kind of peaked our interest with Liontown was that their CEO sold $1 million worth of stock right around the Christmas time when no one is paying too much attention. And what was particularly interesting, they sold stock right after a period of weakness in the share price, which is unusual. Normally, CEOs and CFOs sell after a period of strength. The company had, I think, 15 red flags on our -- on Plato's Red Flag Process. So this confirmed our short thesis. Sure enough, a few weeks later, it comes out that the financing syndicated fallen over and the stock price fell 25% on the day. Lendlease is another name that we've been short for some time and has continued to generate free cash flow and to execute its turnaround.

Actually, Dave, you've just mentioned your red flag system. Perhaps you could briefly explain that, just in case some of our shareholders went on your other call?

Yes, sure, Caroline. So the -- it's a bit corny, so you forgive me. But Warren Buffett likes to say that there's only 2 things you need to know on investing. Rule #1, don't lose money, rule #2, don't forget rule #1. And that's what the red flag is all about, making sure that there's no land mines in our portfolio. So we've actually got 150 different red flags that we look at before we make any investment either long or short. What are those red flags? Like an example might be if some of the directors have been involved in a historical bankruptcy. We have some very interesting data on that. We'll look at who the auditor is, what's the quality of that auditor? Are there related party transactions that allowed them to use creative accounting techniques? Do investors have a callback, do a management have callback provisions? Is there alignment between investors and executive in terms of remuneration structures. So a lot of companies will have 1 or 2 red flags. But if a company has 8 or more, we pretty much will run for the hills. I remember Volkswagen had 17 red flags before their Emissionsgate cheating scandal. So this is a really powerful tool we have to identify land mines on the long side and potential short ideas as well.

So I find that really fascinating in terms of how you do that. But what I want to talk about is Future Generation Global has a bias towards small to mid-cap companies. So what has been happening globally in that small cap market, especially when everybody is talking about the performance of the so-called Magnificent Seven, but they're also different?

Yes, they are. Like the Magnificent Seven, it's a catchy phrase price, but there's some companies in here that are incredible growth stories like NVIDIA, but you look at Apple for example, that's arguably x growth and hasn't had a new category killer product in some time. In terms of what's happening in smalls [ though is ], the good news on smalls and mid is, they look incredibly cheap -- cheapest in 15, 20 years. So that's obviously a good thing. The other side is maybe that may be that the -- many of these companies are cheap for a good reason. The companies that are really benefiting from the AI age, if you like, are the ones that have a huge amount of scale and the data needed to really make use of these technologies, and that's much less important in -- or available in small and mid-cap space. So part of the like value tells the story, but maybe there's a reason for that as well. But I can see small and mid are having that down some, for sure.

So we've all read that more than half of humanity is going to be heading to the ballot box this year. And that's the most ever in sort of human history. So that's what more than 60 elections, obviously, the U.S., India, Russia and the U.K. and Indonesia. How is this going to impact global markets from your point of view?

Yes. Great question. I think something like 85% of the world's people that live under democracies are going to the polls. So -- look, I won't talk about all of them, but the European ones are really interesting. Like people talk about the grand coalition in Europe, where there's 3 more centrist ruling parties that have garnered the vast majority of the vote since the founding of the EU really. And if the polls are correct, for the first time ever, that grand coalition of centrists will hold less than 50% after the election. And there'll be potentially quite a hard turn to the right. So there's questions there. What does that mean for the green energy transition within Europe is a valid question. Another like in the U.S., like there's a lot of water to pass under the bridge before then, hopefully, both candidates are alive and healthy by the time that, that comes around. But quick question marks there, like if Trump is to win, then that could precipitate a trade war with China. That could be very inflationary and interest rates could increase again.

So what sectors don't you want to be in, for example, -- if Trump wins, for example, I know -- I mean I know you -- I've heard you talk a lot about stress testing. What's coming out of that?

Yes, sure. No, good question. So what we actually do, we measure how sensitive each of the companies in our portfolio are to changes in the bedding market odds that Trump provided are going to win. It's real money behind it. And as good a prediction as any. And the companies that are really sensitive to that is cyclical mining companies, energy companies will do well if Trump gets elected. For Biden, it's more the green energy transition companies are likely to get an additional boost. So that's the kind of the swing factor there, if you like.

I find it really fascinating. So thank you so much for your time, David. We really appreciate everything you do and all of your work and so we can actually provide funding for Australian not-for-profit. So I'm not sure -- we do have some questions coming in, but I'm worried about time. So I think we're going to go to Zoe now. Zoe, are you there?

Yes, I'm here.

Fabulous. So as I said earlier, Future Generation Global and Future Generation Australia have donated AUD 75.8 million since inception and we are on track to comfortably eclipse our target of giving AUD 100 million by 2030. And you are one of our recipients for Future Generation Global and what you've done in the 10 years since you started is really impressive. But I think if anybody wasn't at our Brisbane roadshow, tell us a little bit about your program.

Yes, very happy to. And I think probably the easiest way to describe Happy Paws, Happy Hearts is to frame it around assistance therapy because a lot of people, when they think about assistance dogs understand that those dogs are trained and matched individuals who need them, so you can think about dogs who are blind and like. What we did is we flipped that completely around. And we decided that, well, there's people in need, young people in need, what if we could bring them out of isolating situations and take them to where the animals already are and there's tens of thousands of animals sitting in rescue shelters. So we do work with puppies like I brought to the Brisbane event, but we also worked with cats and amphibians and reptiles and all of the animals that you can imagine come through these rescue centers. And the young people go through our programs, they group together and they learn how to work with the rescue animals. They build up their well-being, build up their confidence, they make friends. And then they go into a pathway, either back to school or onto employment. And really, we kind of say, it's one of the coolest universities around because they're getting those life experiences that they otherwise wouldn't, but they get to do it with animals in every one of their sessions.

So I love the fact that, Happy Paws, Happy Hearts, is your purposes because obviously, that's what future generation is. So when you're helping both sort of people and animals, do you also hope that they'll get a job with animals or is it just more to get their confidence up and help them for whatever they need?

Yes, we do hope they'll get jobs, but we're really about their individual journey. And so the natural assumption would be that they're coming into work with the animals to end up working in that space. But actually, our young people are so diverse, they have such different desires for their future. So some of them want to be aerospace engineers but they didn't get through school because of their social anxieties and the animals really bring them into a space where they can rebuild their confidence and reignite their love of learning, to actually achieve those dreams. So we love that it's your purpose as well because the other part of it is that the animals do truly benefit from the time with these young people, the animals are going on a very similar journey to these young people. Rescue animals, they are trying to refine their confidence in people. They're trying to find their next stage in life. They're recovering from trauma, which so many of our young people are. So they go on this parallel journey together. Some of the practices definitely do end up in the animal world, they complete their certificate to become vet nurses or they go and work in the farm yard space, but it's really -- it's individualized. What do they want to do and we're there to provide that confidence in that platform to help them go into that next pathway.

So I mean, obviously, you talked a little bit about the trauma. I mean we're all reading about youth mental health figures. And it's really stressing, what are you actually seeing on the ground? Because you're dealing with the issues continually?

Yes, we really are. And it's -- it's probably one of the worst phases that I have seen in living memory because we're seeing really terrible rates of the suicide. And we are working with young people who have not left their homes apart from a central kind of medical trips for sometimes 3 years. We're working with young people who just simply cannot face schools. So a lot of school refusal is common in the participants that we see. So we're really starting from a very difficult place to reengage. And then actually, sometimes that journey can take a long time. We just transitioned a young man, and it's taken us 6 years of work with him, and then he's gone on to get his vet certificate is that placement. So it's really amazing that he's getting there, but it's a 6-year journey, and that's just the level that we're working with. And there's also just a crisis across the, the hospital system, right? We actually can't keep up with this. We can't keep going, in my view, on this path of just reacting to the crisis we need to come into the prevention space.

So maybe if I could briefly ask you why prevention is so important because obviously, we now fund towards that area. But what's your view on that?

Yes. Well, prevention for me and in so many settings, you can understand that prevention just makes sense. What we see in our hospitals and the overloading of the hospitals and even just access to psychologists right now, it's really, really difficult. So if we don't do something on the prevention side, it just leaves so many people without that important care and as I flagged before, it can lead to disastrous consequences. For me, though, like it's obviously really personal. Like we want to bring these young people into their own lives. We want to return them to life. I want to see these young people not shut out from that potential. So if we can get in there in the prevention space and actually draw them out, bring them in, give them that confidence, return them to school. I'll tell the story of this young woman [Shea], when she first came in, she was not saying a word. She's so traumatized from that experience to school and her social anxieties were so high that her mother never thought she would return to school and never thought that she would sort of step outside of her own home. Without the prevention space, and we're leaving the likes of [ Shea ], to language for a very long time. And then that just adds cost, adds cost, adds cost or results in consequences that we all don't like to think about, but that is the reality.

I mean I know that you're definitely in terms of expansion mode, but we have a question from Liz and it's why don't you operate in Victoria?

Thank you. Liz. It is our ambitions.

You need [indiscernible] with Zoe and...

It is our ambitions. We are in the scale-up mode as we flagged. We are -- from Dalveen, Queensland, get to New South Wales and down into Hobart, with the help of Future Generation we've been able to add locations. But there's something like 40-odd locations across the country and Victoria has definitely got a number of those that we will scale up into for sure.

Excellent. Thank you. Thank you, Liz and we need to connect to both of you. But Zoe, I mean I think the work you do is credibly important. So I just want to thank you very much. And I'm just going to now turn to shareholder questions because we're getting quite a few in. So Geoff, are you online?

Yes. Not -- all good, Caroline.

I am just going to start reading out quite a few of these questions. So we've got a question from Janine. Is the profits reserve of 6 years excessive? And the next question on that from Graham is, he's confused about how to view the profits reserve. Obviously, I'm saying that it's working for them, but does it mean it's invested? And is it part of the NTA? I mean would you like to answer that or I can...

No, thanks. So the answer is like the -- the profit reserves is part of the NTA. So effectively, so we've got FGG, something like $550 million of assets and they are invested. And they're invested with the fund managers, which the investment committee think of the smartest operators. To me, we talk about large and small. I'd sort of put that to one side. In theory, these guys, and you just heard from one of them, they're looking for quality companies -- undervalued quality companies. And that's why we've set this funds management group together. So the profit reserve is an accounting figure. Now when you make profit, you're allowed to -- from an accounting perspective, put it into a profit reserve, which allows you to pay dividends later on. Now for those dividends to be frank, there's got to be franking credits as well. But -- so in theory, 100 -- I suppose when Caroline saying the money is working for you, the effect of the $550 million is -- or $1, say, $1.50 odd a share in FGG is invested and working for you. The fact that the profit reserve may be $0.40 of that, it's not held in cash to give back to shareholders over time. It's all fully invested. That's purely accounting. In terms of why don't you pay bigger dividends? If you look at FGG and I think it's yielding, what is it, close to 5% on assets -- actually on NTA. Sorry, on NTA about 5%, but on share price because the shares are trading at a discount to NTA, say it's probably closer to that 6% mark or just a little under. But that's after tax. So if you look at it, we're giving you a say, 6% return, which at a pretax level, to make that fully franked, we've got to pay tax, now 30% tax. So therefore, the gross up return that we have made to pay that out to is closer to 9%, 8 and a bit percent. So therefore, that is a very large pretax amount of money you've got to make. And the risk with listed investment companies, and I've seen it before. And I can give you some examples more recently, when you start pushing the dividend too hard, then all of a sudden, the investor -- for their returns, they just assume their dividends -- they get their dividend for free and they want their capital to go up and say, if these fund managers are going to deliver 10% to 12% per annum, which is say the market does. Then if you're getting most of it as a fully franked dividend, then you virtually get no capital growth. And the risk is -- and this happened to one of our -- one of the Wilson Asset Management listed investment company, WAM Capital. Now the portfolio have outperformed the market over the last 4 years, gave a return of close to 7% when the market was 6% and a bit but we're paying out 14% pretax. So where does the 14% come from? You actually lose 7% per annum. So the Future Gen Board, obviously, is aware of what's happening in the market. And they're happy to gently grow the dividend. In terms of franking, there is an excess franking because you only -- so in theory, it's not as if we're sitting on a $0.40 of franking. Now that would be a different scenario. I think FGG, it's a year and a bit of franking that we're sitting on. So that just means security for you getting a fully franked dividend over the next 12 months. And the profit reserve there is just to give you confidence. And that's why I know there's questions about premiums and discounts, both and maybe I'll touch on a little bit of that now, while I've got the floor, both FGX and FGG will trade at premiums again. They've traded premiums before. I think FGG was trading -- it got to a 10% premium at one stage. The last premium, I think, back in 2019 was about 6% premium. Why are they trading at discounts now? From my perspective, forget what's happening in the rest of the market, in theory, it's purely supply and demand. If all our investors understand what we're doing and align what we're doing and happy with what we're doing, then you'll find, there's very little selling and only a little bit of buying moves that equilibrium and gets you to equilibrium, which is NTA. What we had with both FGX and FGG back in '19, we raised a reasonable amount of money in both entities. And with what we saw soon after that, unfortunately, global markets and the Australian markets, all got a bit of a wobble. So people have put their money in, all of a sudden, then decide, maybe I want to take my money out. And then we've just been working through that. And to me, it's like -- I mean, we've been talking about it very recently. I think we've got to sort of reengage and repackage what the investment opportunity is. Here, you've got the smartest fund managers globally that we can assemble and they're working for you. In terms of the smartest managers that we've assembled, we've got there is a combination of managers that are long in the market, but some -- and you just heard earlier, some short in the market. So they are actually giving you protection. So -- and they're looking for the high-quality growth companies that are coming through. So there's periods of time where -- from a risk-adjusted perspective, you may be getting a really good return, but you think all will, but the market has better than that. Well, then you're in the wrong investment. If you want high beta, if you want high risk or higher risk, then you go into a fund manager that has less stocks. This is a diversified portfolio that we believe will give you better than market returns with less than market risk over time. You're better off nearly buying 1 stock if you want high leverage. So you just -- you got to understand what you're investing in. And I think what we've -- since those last raisings, which -- [ where I am out ], a lot of the people have put their money in didn't understand what they're investing in. And so we've actually had to work through those. And as the share register tightens up, and then that will happen. Then the share price slowly moves to NTA and then eventually it will trade at a premium. So I know I've covered, but hit me with the questions, Caroline, because I'm happy.

So basically, we've got a question from Rick, you have partially asked it, but I think it's important to ask you again. The profits reserve is enormous compared to total dividends paid since IPO. Why does the Board hold back to these investor earnings rather than putting them into investors hand because then it would make the TSR look so much more favorable?

Yes. The -- in theory, the profit reserve is accounting. It's realized profit on a monthly basis. So you could have -- it's not on an annual basis or a half yearly basis. So you could have a situation in a 12-month period where the first 6-months, the market goes up and the second 6-months, the market goes down. So we, as a Board, trying to get in the position that we can keep giving you a growing stream of fully franked dividends. But in that example that I gave you, you could have a situation like if the market went up by, say, 10%, we're talking about $55 million going into the profit reserve. If then over the second half, it went down by 10%, then because it goes into profit reserve realized or unrealized, if the second half of the market falls back by $55 million, then at the end of the year, there's no -- there's still $55 million is gone out of the profit reserve, but the assets haven't changed. So you've got to look at it from that perspective. It's not as if the -- what's in the profit reserve is all money that's been made, they are unrealized profits. And the reason when they become realized is when we pay our tax and I mentioned, I think the number -- FGG, in theory, our ability is to frank a year and a bit, that's -- we've got enough franking to do that. So it's not as if we've made all this money, and we're sitting on all this. Now we paid all these tax, and we're sitting on this money that we haven't paid out to you. So. and that's a classic example. So there's the smart people that have called into the webinar, so they're getting their questions answered, but there'll be other people at home reading this and saying, well, I'm actually angry with the Board. They're not doing a great job, and they're not fully understanding the nuances and it's really helped how we position that. And the more we can communicate with, and that's why Caroline, I think mentioned earlier that we're trying to more aggressively -- not aggressively, more consciously call as many shareholders as we can and even go down the share register and communicate clearly to them and get all their questions answered because the more you understand the company the more -- you're more comfortable in sitting there and letting the company perform for you.

So Geoff, I might go to some more questions because we have a fair few, and I have to close this in 5 minutes to go to Future Generation Australia, but we'll answer them again. So Adrian has said, how long will the sort of 15% discount in FGG be permitted before major action like a conversion to open end happens? I mean, obviously, capital management is [indiscernible].

Yes. And I know another -- there's another question about buybacks. I think there's so many. To me buyback don't work, and we can talk about that. It just reduces the size of the company. I know the economics make sense but there's no -- we've studied them. There is no -- that doesn't really work in terms of open ending it. What value is that? To me, you're all smart. The people that are on the call here, we know what the assets are worth. We're not going to be selling at this price. Now, I'm not selling at this price. And we know that at some point in time, they'll trade it in NTA if not a premium. The -- and we all know that investing is a patience game. And we'd all love it to be a premium now. So to me, it just doesn't -- it doesn't make any sense open ending because then when FGG is trading at a 10% or 15% premium, then you would have been better leaving it as it was. So -- and you can argue they should be at a premium because to get access to these managers cheaply, you're actually -- everyone is getting a good deal. You're not paying what they normally -- these managers. Only 1% is going to charity. And all these managers, most of the charge performance fees. They're not paying them, so you're getting a really good deal. So, Caroline, keep hitting me in the last couple of minutes.

Okay. So Rebecca would like an update on the FGG portfolio strategy and progress regarding environmentally sustainable investments and reducing our exposure to fossil fuels. Maybe if I actually say that our coal and consumable fuel exposure is 0% and obviously, David just spoke about his red flag system. And they have -- they basically have short investments and our exposure there is sort of minus 0.03%. In the annual report, it goes through everything with FGG, so for distillers and vintners, we have an exposure of 0.85%, casinos is 0.93%. We have no tobacco. And I mean as it's sort of -- in terms of very small in terms of consumable for, which I just said and brewers. But I mean, obviously, I mean, Geoff, from the investment committee, which obviously you...

Why don't we leave it there because I need [ to thought ]. And if you can e-mail with more detail.

The next question -- which one, I mean, a lot of them are about -- how many -- I can actually e-mail that one because it's quite a long question. These are about discounts, Sorry, they're just coming and going. What else? Ken from Craig, can we provide a graph illustrating both share price and NTA points against the underlying indices since inception?

Definitely, definitely, easy. And like please send it to him. And you got to remember, like these are listed investment companies. So they actually pay tax. Now someone asked me recently, they said, look, my son is thinking -- I'm trying him to get into buy shares in a listed investment company, he's saying maybe we should buy a property. My answer to that is, he should buy the property because if he gets no benefit franking credits, he's better off buying a property because it both -- a listed investment company and property increased 10% in the year, and that's realized 10%. With the listed investment company, then you pay 30% tax. And then you get that back as a fully franked dividend, a 7% fully franked dividend. If the property goes up 10%. And if you haven't sold it, then your assets have gone up 10%. So you only pay the tax when you sell it. So with an investment company, the profit it makes it pays tax on. So there's no use looking at an index versus that because you're actually just -- you're putting both arms behind your back on one of your legs and tying yourself up because broadly 30% per annum is going -- and that's why you've got to add that back if you're going to do that. So -- but we can provide all those numbers. What else have we got?

From Paul, are there any other fund managers replicating our investment and social impact model in Australia or elsewhere? And is that [indiscernible].

Look, I copied this from a guy in the U.K. His focus was the battle against Cantor Investment Trust. There's another group here HM1 but they support medical research. So it's all different structures, but there's probably 6 or -- there's 3 or 4 unlisted ones as well in Australia. So it's like, to me, it's good on the investment community and all these fund managers being prepared to give back and manage the money for nothing.

Okay. So in terms of the franking credit balance of FGX. I can ask a...

We're good on the FGX.

That's fine. So the rest are coming through now for FGX. So I might actually close that off because we're at 12:46 now, and we've actually got some more callers coming in.

But any questions for FGG, like it is your company, and please, the more you understand it and -- then the better. And we're very happy to spend time to taking through the nuances. And really, if it's not for you, if you don't want like the smartest fund managers that we can assemble managing your money pro bono then sell your shares because then the quicker that everyone sells their shares then the quicker they'll trade at NTA, and we have that alignment.

Thank you very much, Jeff. And all the others I will ring, please give me your for numbers, but I think I'm getting them. So that's all good. So welcome to everybody that's joined in now for Future Generation Australia. And I'm actually going to be joined on this webinar with one of our pro bono fund managers, Blake Henricks from Firetrail as well as Geoff, he will be back to answer the rest of the questions. So before we get started, I just want to reiterate what I was saying earlier about being a Future Generation shareholder. We're talking about it a lot internally and externally. And we've realized it means you get to be both an investor and a philanthropist. So you are investing with the best fund managers and you are reaping the financial returns they deliver and you're making a real impact in the lives of young Australians and they're all working pro bono. So -- and we're going to be hearing from Blake and we'll ask him why does he work with Future Generation Australia? Because if that, they don't charge any management or performance fees for managing that your money is pretty amazing. We are, first and foremost, an investment vehicle. So I think it's important to run through Future Generation Australia's performance for the full year. And I want to remind you, any questions for Geoff and me will answer afterwards. So here, we have the highlights on this slide. I'm not going to cover every aspect of results because, hopefully, you've read our annual report and our full year results. But as you can see from this slide, the investment portfolio outperformed by both the ASX All Ords and the ASX Small Ords in 2023. And this is pleasing, I think, for all of us because the Future Generation investment -- Australia investment portfolio has a very strong bias towards small, mid- and microcap companies. And as you know, these stocks have faced really quite serious headwinds over the last couple of years. So I think it's important that we give you some context about why we operate in this space. So we have a brilliant Future Generation Australia Investment Committee, known as the IC. And they advised superannuation funds. It's got some very great financial names on there and they choose the fund managers that we actually allocate to. And they look for fund managers. We've got a proven long-term ability to outperform the market and their peers. So the IC really believe that fund managers who can generate the most outperformance or Alpha, as it is known, are the small, mid- and microcap managers. As a result, the 50 biggest companies in Australia, which make up 73.1% of the All Ords make up just 39% of the Future Generation Australia investment portfolio. And the top 200 companies in Australia make up 97.2% of the All Ords and that just makes up 66.4% of the Future Generation portfolio. We've written this up also in the annual report in terms of how the IC invests. But I also think in terms of the mix of investment styles in our portfolio, our exposure to long equities delivered a return to 14.5%. And our exposure to absolute buyers got us a return of 13.4% and this drove us to outperform both the All Ords and the Small Ords. We balance these strategies with market-neutral strategies and cash, and that very much gives that downside protection and the reduced volatility. So I think let's turn now to dividends. And Geoff is very happy to talk more about how the IC sees our portfolio later. So with dividends, this is really important for many of us. Future Generation Australia declared an increased fully franked final dividend of $0.335 per share, bringing the fully franked full year dividend to $0.067 per share. And importantly, we have 4.5 years of dividend coverage. This dividend represents a fully franked dividend yield of 5.8% and a gross up dividend yield 8.3% including franking credits. I'd like to also briefly go through our social investment in 2023, Future Generation Australia delivered our ninth annual investment of $5.2 million to our social impact partners where we focus on children and youth at risk. Our total investments since inception is our 37.8%, and we do this because our fund managers, our Board members, our investment committee, our accountants, our lawyers, they all waive their usual fees. In 2023, the amount of fees foregone was around $8.6 million or just 1.6% of the net assets of the company. And one of our very generous fund managers is Blake Henricks from Firetrail. So thank you very much for joining us, Blake. I think I can hear you.

Can you hear me now?

Yes, I can. That's great.

Great to be here. Thanks for having me.

Thanks so much. I appreciate your time. So you have some large caps in your portfolio and you're predominantly a mid-cap player. I've just talked about Future Generation Australian have a very strong bias towards small, mid and microcap stocks. So when do you expect the sector to recoup some of the relative underperformance and why?

Yes, sure. Well, I'd make a couple of points. So the first one is that as we look back through time, what we generally see is over the last 20 years is that mid-caps and small caps tend to outperform large caps. And so if you look over the last 20 years, the top 50 have delivered about 8.91% per annum, whereas the mid-50 have delivered something positive to 10%. So over the long term, mid-caps generally outperform large caps. And the second thing is that coming out of economic slowdown, in particular, medium to small caps do very well. So if we look at the average recovery out of a recession. We see large caps doing around 19%. We've seen the mid-caps deliver up to 29% or 30% coming out of those slowdown. So that's where we see those big returns, and then the other thing is mid-cap look very attractive. So if you look at it on a multiple basis, the PE you're paying for $1 of earnings is about the same, looking at a couple of years, but the earnings growth is much higher. I just got the step in, but the ASX 100 is expected to grow 2% per annum over the next 3 years. That sort of mid-50s is expected to grow at 5.3% per annum. So there are 3 really good reasons why being exposed to that mid- and small area of the market is attractive. When it turns, I don't know. But if these companies continue to generate that cash flow, that earnings growth, those ratings do happen often when you least expect it.

So I mean, obviously, you've just sort of briefly talked about the market. What's your outlook for the rest of the year? What are you thinking in terms of how your portfolio might change?

What we can see out there is, if I go -- and when I think about the market, I think it's best to look at sort of 3 key sectors. So the first one would be the banks because they are a large part around 20% of the market. We don't see a lot of opportunity in the banks. In fact, in the portfolio we manage, we don't own any Australian banking shares. And the reason for that is the multiples are very elevated. And the competition, in particular, is very high. Even just this morning, I spoke to a mortgage broker, and they love using Macquarie. Now Macquarie as a mortgage player wasn't really around 5 or 10 years ago. They've really changed the market, made it very competitive. And as a result, with declining return on equities and dividends that are pretty full now. We don't see a level of opportunity there. If I then move to resources, the market very bearish to China. If you open up the paper on any particular day, you will hear how bearish it is. But iron ore is $130 a tonne. That is a very high price, BHP and Rio are making a lot of money, reasonable balance sheet. So I think the resource side of the equation looks okay. And then you go to industrials. And I think industrial is probably a bit of a bright spot out of reporting season. And the main reason for that was because of very low expectations, I think what we've always got to remember these companies, people, we don't operate in vacuums. What I mean by that is if the revenue is a bit lower, you don't just sit there and eat it. You typically reduce costs. And so we saw a lot of cost control in the reporting season. So what I think -- what that comes together as is the market looks okay to us. Moderate growth, but I think where you invest is going to be really important.

So you mentioned, obviously, the reporting season, you've mentioned cost control. What about consumer sentiment, where -- is that a really important thing for shareholders to think about?

It is, but consumer sentiment has been very low now. I think it's even lower than COVID at the minute because of the cost of living pressures, which are real for many segments of the economy. The offset to that is if we look at the over 50s and we look at the CBA credit card data, what I'm suggesting is spend is extremely strong. So while the media will focus on all the negatives and the cost of living pressures and higher interest rates, there are probably a quiet proportion of the population who are actually doing pretty well. So we don't look too much to consumer sentiment now. What we're looking at is some of those high-frequency trading data points. And it suggests the consumers actually okay out there.

And maybe if we can go back to inflation and interest rates because they are speaking a lot of our investors, and we've got a couple of questions on that because we've got many fund managers predicting the first rates will come through in the middle of the year. John's asked, what do you think will happen with interest rates? It's a hard question.

It's very hard. Well, there's a lot of money that goes through on interest rate instruments all the time, and I went and looked at those just before I came up here, actually. So the question is a good one. What the market is expecting is the first cut to be in August, September. What we're seeing on the ground is the consumer is probably a little bit more resilient than expected. We're seeing house prices rebounding quite strongly. Much stronger than we would have expected. And even the equity market, which is usually a pretty good barometer of how things are, is hitting all-time highs in the U.S. and has rebounded very strongly in Australia. So I would -- if you're going to put me on the spot, which you have, I'd say [indiscernible] may push back beyond August, September because the economy has been much more resilient to these higher interest rates. And I think one of the things all of us fall in the trap of is extrapolating the future or if things change, thinking and I'll go back to where they were very quickly, interest rates were coming from a very, very low point. Current interest rates are actually pretty normal in a historical sense. And so the idea they need to be cut aggressively given the economy is holding up, I think that will prove to be a little bit optimistic. But I think it's also fair to say that with inflation coming back, the idea that interest rates need to go higher is also unlikely.

We've had a question from Daniel, who's one of our shareholders. And he said, you're a high conviction fund, what are the companies and sectors you're most excited by?

There's a couple of sectors we're exposed to. The first one is health care and it's CSL and ResMed in particular. ResMed to us looks amazing. There is a long-term threat out there, and that is weight loss drugs. 80% of ResMed customers are obese. So a lot of those customers, if they were to lose a lot of weight they could potentially get off the ResMed device. But there's a few reasons to really like it. The first one is their nearest competitor, Philips is out of the market at the moment and is likely to be so for the next 2 to 5 years, so ResMed almost has a monopoly in the U.S. in the next few years. The second thing is long-term threats are often overplayed. I'm sure all the people on the call would know when online shopping came around, JB Hi-Fi is going to be the big loser. JB Hi-Fi is hitting all-time highs. And yet online shopping is now -- in that electronics cater 15% to 20% of sales. Companies adapt to whatever circumstances they see. So we think ResMed is very attractive. And I'll contrast it for you against something like a Commonwealth Bank. Going back to 1999 Commonwealth Bank and ResMed have never traded on the same multiple as you would expect, ResMed's always traded at a higher multiple. If you look into the year 2025, which is not far away now, I'm sure you'll agree, these 2 companies are on the same P/E, that's never happened since 1999 since trading began. And so we think there's a really compelling argument to say as a high convention investment manager, the likes of ResMed and CSL look very attractive. Commonwealth Bank, on the other hand, looks extremely expensive. The other thing I'd say about Commonwealth Bank, great dividend payer, a great company, all those things, but the earnings per share haven't changed since 2015. Pretty amazing what's going on and where the stock is hitting all-time highs.

Talking to our shareholders and obviously, you're sort of talking to a lot of consumers, they're very concerned about the cost of living. The government it's going to impact perhaps their election results. We've got the green, like cost of living, inquiring, supermarket pricing. Do you expect more regulation perhaps into energy companies? And how are you thinking about that in terms of your portfolio?

This is a tremendous question and through reporting season, it was a real theme where companies want to avoid what's happened to supermarkets, which is now a parliamentary inquiry followed by an ACCC review, which will include in February next year. Speaking of the supermarkets, I think they're much more concerned about the parliamentary inquiry because that's when the gotchas come and the bad press comes. They believe the ACCC inquiry and review, which finishes next year, is unlikely to turn up too much because if we look at the return metrics, the margins, the cost they've incurred, they believe there will be nothing to see there. However, there are some sectors who are investing heavily to try and avoid any kind of regulation -- a few companies call out. The first one would be Qantas. There is an ACCC inquiry there on paying for no flights. They're investing $230 million into customer experience, the company was down 8% on the result and has continued to fall since that moment. So companies are trying to get ahead of it. We saw AGL and Origin and I know that was the question about energy regulation. They're also investing aggressively into hardship payments. AGL, I think, called out $45 million of extra hardship payments. So companies are very aware that this Labor government likes to get involved into industry. But I would be a little bit -- I think the government got over their skis a little bit. This is going back 18 months ago when they tried to intervene in the energy market, actually try to cap gas prices. Now gas is a commodity. It moves up and down and at the time was very high. So the government came in and said we're going to cap prices. What ended up happening was everyone said, well, we're not investing. And now we're going to probably face a shortage over the next couple of years on the East Coast in terms of gas. And so that $12 cap in gas has now been all fully abandoned. So I think the government also learned that you can't just step in, but certainly, grandstanding putting pressure on companies is more likely the way. So more a -- gentle in some cases, more aggressive than others pressure down on profits, but not a full-blown disaster for companies.

And is there anything else that shareholders should be thinking about when they look at the Australian market and influences from offshore?

Yes. I mean one thing we've seen, I mean you heard more comments on Commonwealth Bank and just how expensive it's become is -- markets are now reacting a lot to very short-term news, which is creating great opportunities for investment managers. The other thing is people are investing more heavily in indexes. And that's great news for us because it means that certain companies are getting bid out way above what they should be just because they're large and they get larger. And in the case of the U.S., I guess, AI is here, it is going to be real. The impacts on the negative side, I don't think have been fully explored yet, but meeting with companies through a reporting season, what they're telling me is we can control our labor costs, labor cost this year will probably be up 4% or 5%. But the one thing we're really struggling with is technology costs, the Microsofts of the world are putting through 12%, 15%, 18% price increases. And we all know we can't do without it. So I think certainly, some of the hype in AI is going to be real. But as always, in these kind of moments, some of it is a bit overhyped as well.

Thank you. Well, thank you so much, Blake. I really appreciate your support of Future Generation Australia, and thank you very much for your time today and answering our shareholder questions. Thank you. So I'm now going to get Geoff back on the screen. Hopefully, he's still there in New York. So we've had -- we're having a few discount questions now. So I just thought we should sort of jump into it. Sarah has asked what strategies will FGX employ to reduce the share discount to NTA in 2024? And then Damian adding to that, sort of when is the Board going to proactively manage the share price discount. This would contribute more to capital growth. The Board is failing shareholders when it does not proactively manage risk.

Yes. Well, the -- unfortunately, that statement is incorrect because the -- in terms of the Board has various jobs to do. And the -- in terms of saying that the share price trading at discount NTA or trading at a premium NTA is about the Board managing risk. In theory, the Board obviously looks at the IC and the IC decides which managers to allocate the money to. So the scarce assets that we all have, the $550 million that's in FXG, that is invested wisely. So that's -- and in terms of -- you heard from Blake, he's one of our investment managers. We've got the smartest group of fund managers managing this pool of capital. And if you look at it, and they're investing in what they believe are really undervalued, high-quality companies that are going to show really good growth. And Caroline mentioned the numbers earlier in terms of the -- if you look at those managers, they've probably got a skew to the smaller growth companies but they have high levels of skills. So they've actually been able to outperform the All Ords, but also at the same time, outperform the Small Ords over the last 12 months and also since inception. So to me, like that's what the board is there to do and the investment committee. In terms of the share price, well, that's another thing. That's -- as Warren Buffett says, that's a weighing machine in terms of the amount of people that are at the moment -- because trading at a discount to NTA, then there's more sellers than buyers. And part of it is that not an alignment, a full alignment of what the company and the Board and the investment community are trying to do and the understanding of the investor. Because if you were -- if I was an investor looking at what the underlying fund managers have done in terms of performance this last 12 months, I'd be very happy. So that's that, but I don't think I answered. That was more of the second part of the question. The first part of the question was more about the discount. And I think what's being done on the discount. Now the -- like Caroline can touch on it, but there's -- we're acutely aware of the discount, the last time FGX was at a premium was 2019. I think it was at about a 5% or 6% premium then, and it's gone to a discount. And it has been at a bigger discount. I think -- well, I mean, we haven't updated the numbers, but on last month's numbers, what was it was about a 12% discount. Probably if you adjust for the market being up 1% or 2%, there's probably a -- maybe a 13-odd percent discount now, and the goal is for that the share price to trade at a premium. And it's really the -- yes, I mean we've got to position the company. So the people investing in it are the ones that want to be invested in this type of business. But at the moment, obviously, the one is selling, yes, we're rolling out of people that have -- for whatever reason, been frustrated. Now they could have been -- I remember when soon after I think FGX [indiscernible] shareholder rang and said, Oh, is it going to come on at a 10% premium, well, it's never going to come -- well, actually, it did go to a premium. No, no, I didn't know where to a discount. FGG went to a premium early. But, yes, to me, it's misalignment of expectations. So acutely aware, Caroline, I mean one thing, Caroline, do you want to just go through what you've been working on for the last 12 months in terms of building the brand and then...

Yes, of course.

Planning a field and then the logic is to reap the benefits. But do you want to go through...

Obviously, we are completely focused on getting it back to a premium. We've improved, I believe, the brand awareness and our media presence is incredibly strong. I mean, we were in online today in terms of what are preferred companies to buy with sort of dividends, and that just popped up so it's been really important, I think, to sort of raise that awareness of what we do and to actually make sure that people understand, yes, we are an investment vehicle, but we also give to not-for-profits to make a real difference. We're very lucky. We are supported by a very good corporate affairs team and a shareholder engagement team and also our fund managers help us there as well. So the other thing which I'm really delighted about is that we have the courtesy of Wilson Asset Management, we've got to full-time distribution personnel, and that's something we've never really had and they give a lot of time and effort and thought in terms of how we're going to be talking to brokers and planners and wealth managers, and we've had a lot of interest there. I mean, these are a lot of strategic measures that we're actually doing to make sure we return the share price to a premium to NTA. But I also think it's very challenging markets there, and we just have to work really hard to actually make sure we have -- that happens. I think, as Geoff said, we've got a very strong investment portfolio in terms of its performance. We've got that growing stream of fully franked dividends. And I think with targeted communication and that engagement strategy, it's all going to make sure that we meaningfully return the share price through a premium. And that's over the medium term. And we're very optimistic that's going to happen, as Geoff said, it will happen, and we're going to make sure it does by making sure we actually speak to our shareholders as much as we possibly can. We really pride ourselves on getting back to shareholders. Any of the questions we don't answer today, we will definitely follow up like we always do, but I think it's also making sure everybody understands what exactly we do in terms of our investment criteria and what we're trying to do on the bigger scale. So I'm actually -- I'll let Geoff, you got anything else to add?

I would -- one of the things that we -- obviously, we're very aware of this, and we'd all be a lot happy if they're trading -- well, we'll all be happy if they're trading at a premium, but would be sad for the people paying a premium because they could have bought them at a discount. And we've spent a lot of time more recently about positioning. And in terms of how we've positioned the entities, and we're still doing for quite a bit of further work on that. And maybe historically, we position them -- like they are incredible investment vehicles. Like it's a great win for the investor to get exposure to these managers and not pay performance fees. So both combined entities have saved investors, I think a little over $60 million since they were set up. And so that's nearly half the fees. You're really getting this managed for half. If you -- given your own money, to the various managers that are managing, and probably in terms of the positioning we've spent a bit of time, I know the philanthropic side is very important. And in terms of how it gives back, but maybe for the investor, we spent too much time on that. And on that positioning, like Jesse Hamilton, our CFO, send us all around this great article about position -- person that just focuses on positioning and they talk about -- they live in the U.S. They talk about going from breakfast at 08:00 a.m. and I had to write this down because I just thought it's incredible, yes. So they're in the line for breakfast and the person in front of them, orders a double chocolate salted caramel muffin, that's only in America. And the -- and the marketing or positioning person, who is standing behind that person thought like what a strike of marketing genius -- if it was called a cake, then you can only have it for dessert. But because it was called a muffin, then you can have it at 8:00 in the morning. And so in theory, what -- I mean, effectively, the listed investment company, it's all about supply and demand and where equilibrium is when supply and demand are equal and the equilibrium is when the share price is equal to the NTA and we've just got to do a bit of work -- a lot more work, and we understand on that positioning because it is an incredible product. And we have to have everyone aligned and we've got to find the shareholders that want to invest in a listed investment company. If you want to invest in a managed fund, go and invest in a managed fund. If you want to invest in an ETF to get in and out of NTA go and invest in the ETF. If you don't want fully franked dividend yields, don't invest in an LIC. Now to me, these FGX and FGG, they have incredible assets. Now they've got these profit reserves, they've got franking credits to frank the current dividend and there'll be more franking credits as time goes on. And you get exposure to these incredibly smart fund managers cheaply. So to me, it's a great package, but we're just -- I don't think we've been positioning it correctly. Caroline has done a fantastic job since she joined in terms of increasing the brand and the awareness, now we've got a sort of -- that's the ploughing in the field, now we got to harvest. And over the next year or so, I think that's what will happen.

It will, thank you. So we -- I mean, so we've got a question here from Tom, what are FGX' biggest holdings? For everybody, it's actually on Page 12 of our annual report. But I mean, our biggest stocks to BHP, CSL, ANZ, QBE, CBA, Santos, CAR Group, Aristocrat, NAB and Goodman. And you can see all the portfolio weightings. But Tom, I'll e-mail that to you as well. And if anybody else wants it, please let me know. I'd be happy to go through the active weight...

And basically what that is, is we've got all the fund managers. Yes, we do this on a regular basis and find out what their weightings are. And then put it together with the whole portfolio, so we've got their weighting. And you'll see there that even though a number of those companies were large companies, the -- because active managers tend to believe they can do better than just buying the large companies. If you just want to buy the large companies, you're better off buying an ETF where the active managers believe they can add value. So their weightings aren't -- we're underweight the index. -- because the active managers believes you can create value.

And the next question is -- would you please report return and volatility based on FGX share price as well as NTA? That's from Steve.

I mean it's a fair point. I mean, we'll run the numbers and we'll send them to Steve, definitely. One of the things about performance and the reason why we quote gross. And now we all know that 1% of the assets goes to charity. So you got to take a 1% a year. So that's your net performance, it's because you're trying to look at the performance against the index, if that's what you should -- but actually, that's probably, again, bad positioning for us because the investment committees collected the managers not to give you the same risk as the index and the same rewards as the index. We've actually collected managers that are absolute managers that can -- short stocks to kind of hold cash that will actually give you a significant risk -- better risk-adjusted return. But because we're getting the return in a listed investment company, if we make 10% on the assets in a year, then we pay 30% tax if those assets are realized, if they're not realized, then we provide 30% tax, and we pay it when they're realized. So you've got to remember the return -- if the index returned to 10% a year, then the after-tax return on that index is 7% [indiscernible] paid 3% tax. And that's -- so that's how you got to look at the LIC.

So we've got a question from John in terms of are there any future plans to increase the fund size, i.e., a share purchase plan?

Yes. I mean, John, that's all possible. The -- it won't be done -- well, the -- well, obviously, I'm one member on the board. It's obviously the Board's decision. But I would say it would be very unlikely that it will be done, unless the company was trading at a premium to NTA.

And I've got another question from -- actually from another, John, would the share price to NTA change if FGX was a larger entity because 500 isn't a large fund these days.

Yes. And there's no doubt there's a correlation between the size of the fund and premium discount. Like if you're a less than a $200 million LIC, all those smaller LICs trade at quite big discounts. And the larger LICs, the FX and the Argos trade a lot closer to NTA, if not premiums. And I think AFIC and Argo a little while ago, that was 10% plus premiums. And we saw that when Soul Pattinson bid for Milton, Milton was the third largest LIC. Now in the LIC space, WAM Capital is the third largest and WAM Leaders is the fourth largest after AFIC and Argo. But when Soul Pattinson bid for Milton, and all they were doing, one investment company was taking over another investment company, so there's no synergistical benefits. Now that we're going to reduce staff, et cetera, et cetera. But I think the Soul Pattinson share price because it was going to increase in size went up 20-odd percent just during that period that the bid was announced. So there's no doubt that people pay up for size and liquidity. I think it's a function of like the investment -- the financial planners looking for -- there's a cost for liquidity in the space. So therefore, if they can buy $5 million worth of stock and sell $5 million worth of stock in a very short period of time, then they're prepared to pay a little bit of a premium for that. So I think that's the logic behind it. But we agree. What we've got to do is we've got to walk before we run. We've got to make sure the positioning statements correct. We've got to make sure all the shareholders like that's 7,500 to 8,000 FGX shareholders are happy and are supportive of what we're doing. And then we've got to get more shareholders that want to come along for the ride, and that's when we then trading at a premium, and then we can worry about increasing the size of the entity.

So the next question from Bill is, can you release the NTA more regularly on sooner than once the month?

Yes, Bill, look, it's really tricky because we're getting the monthly -- the end of month NTAs from all those fund managers that manage the money on our behalf. And then the accountants you've got to put that together. One set of accountants works on it, and then they give it to another group, and then they obviously check everything. So it is -- it's difficult. What -- to me, if you want to try to work out what the intra-month NTA is and what we tend to do is a rule of farmers just assume that the performance is in line with the index. So even though over the last 12 months since inception, we've beaten the index but let's be conservative. Now if the index -- you knew what the NTA was last month, this index is up [ 1 ] and a bit percent since the last NTA was up, then you'd assume the NTA Is up that amount. And if it's trading at a discount, then you're getting a good deal.

And we can't start our monthly NTAs until we've got all of the data from the fund managers. But we are looking to basically restructure our monthly NTAs, -- so we're going to be doing them separately, one for FGG, and one for FGX. And we're also going to make them sort of easier to understand we're going to put more about the investment philosophy in them as well. And I would love to say...

Yes, exactly. That's what I was going to throw in definitely, Caroline. Any feedback, please. You guys own the company. Any feedback you've got, no matter what it is, now please give it to us because it's only by fully understanding what all the investors think that we can do that. And that's part of -- now what we're talking about, part of the goal of getting the entity FGX trading at a premium to NTA is reducing the confusion, say, with FGG or like let's just have it -- and that's part of that positioning statement we're talking about.

And we're going to -- so we're basically going to talk about each of the different entities. And there at the end of the month, we're going to do a wrap with our fund managers. So you actually have more of an insight from them as well. And just an interview with one of our not-for-profit. And as Jeff said, I love feedback. So any would be fantastically received. So we have a question from Bruce, which you have partially answered in terms of whether quarterly reports can provide more composite portfolio metrics through country exposure, developed emerging market value growth expect, so they can understand more about what's under the hood. I mean I totally understand where you're coming from, but it's actually about more of the timing of when we get the reports that Geoff spoke about because we get that data, it's provided on a quarterly or semiannual basis. But we are updating our presentation there. So hopefully, we'll endeavor to get you more information that's relevant in that monthly investment update as well. I'm not sure, we have...

Maybe let's see rather than holding it out for the annual report or the half yearly -- so maybe it's putting it in the monthly as well as putting it in there. So just in case not everyone sits down and reads the annual report, they might be focusing on the monthly and miss it.

So one of the other questions we have -- we had a question from David, and this is more for you, Geoff, in terms of there's any update on corporate raiders and their shareholdings?

Yes. Well, the -- the -- both FGX and FGG, what we understand is there aren't any corporate raiders on our register and very happy for them to be corporate raiders on our register. It just makes an efficient market. In New York, I'm working over here. I'll be catching up and you're probably referring to the article in the Fin Review the other day about Saba. They're -- they play the closed-end fund market and I'm catching up with them next week. And actually, there's a couple of other fund managers that play the closed-end fund market over here. I think Bulldog Investors -- what a great name. And there's a couple of others that I'm thinking I might just catch up with [indiscernible] they don't invest in -- sorry, Saba investing in the Australian market, but that's only been in the last couple of years. The new game down there. They've been playing around in credit default swaps for a long time and equities -- closed-end funds more recently, but Australia, just very recently. So yes, so the -- there was someone like if there was someone buying because they're cheap. Hey, good on them. That's smart. I think that's a smart play.

So we have one question from Andrew, how is future generation tracking with pay equity through its organization.

Board doesn't get paid anything. We got more both FGX, it's probably more males and females. So -- but FGGs...

I mean I came off the board for FGX. So yes, there's no. But I mean they're both small Boards. But in terms of the team that work on Future Generation, we are all females. So yes, I think in terms of comparing it, we're very good there. So that's something I'm very happy about. I'm -- one more question. I think we've basically -- we've got another question on the discount, and I think we are -- I think we're good. I think we've answered pretty much most of them. So unless I get any final ones coming through I think we're good. So well, thank you very much. Geoff, is there anything else you'd like to say?

Not at all. And look, thanks for your support. And please, as we said, it's your company, any feedback you've got, any ideas, any questions because the more you understand the company, then we want to be aligned. Any thoughts you've got on the positioning, how we should position the company because we're spending a lot of time on that because our goal is to get these both entities trading back at premiums to NTA, where they used to, and that will be a matter of time and a matter of hard work. And you can follow us as we achieve that. But thank you very much, Caroline.

Thank you. I couldn't say that any better. So I just also want to add my thanks to David, Blake and Zoe for joining us today. I hope you all enjoyed their insights as well. As Geoff said, any questions, please call us. You own the company and we actually do this because you allow us to do it. So in terms of what we're going to do now, we're going to answer any of the other questions if you have anything else or a full that you want a fuller answer, just please e-mail me. We are going to get the share price to trade at NTA. And I think when we will get to premium will be a lot happier. So I've now got a survey that's going to pop up. So I really appreciate your thoughts on this new structure of the webinar and anything else you can suggest and we have our road shows coming up in April. And if you go to our events page, you can register, but we're also e-mailing everybody on a regular basis. So I really hope that we see you. It will be our fund managers and not-for-profit and also Geoff and I will be there. So thank you very much for listening today. Thank you, Geoff.