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

Hello, and welcome to the Future Generation Australia Half Year Webinar. Thank you for taking the time to join us. I'd like to start by acknowledging the traditional owners of the land where we are and pay my respects to elders past and present. I'd also like to introduce you to the guests that we have today. To my right, we've got Geoff Wilson, probably doesn't need an introduction. But on the off chance, there's somebody online who doesn't know Geoff. Geoff was the founder of Future Generation. He remains our biggest supporter. And he's on the Board of the Future Generation Australia Company. He's also on the Investment Committee as well. So thanks for coming in, Geoff. We've also got Tom Richardson here. So it's been a tough year for active fund managers, but Tom has continued to do really well. He's the Portfolio Manager for Paradice Equity Plus Portfolio and has been a major contributor to our performance for a long time now. So Tom, thanks for taking the time to come and see us as well. So the agenda today is we're going to talk a little bit about the results. So Geoff is going to talk through the dividend decision, which we announced a couple of weeks ago. Then I'll give a quick update on the portfolio. And then we'll have a bit of a chat with Tom about markets and stocks and see what he's seeing. But before we start, there's a disclaimer on your screen now, which essentially says that anything that we say today is general and advice only. There's no personal advice that we are giving. So with that, Geoff, we can say whatever we like now. So we announced an increased dividend a couple of weeks ago. Would you mind explaining the Board kind of thinking there?

Yes. And obviously, sitting on the Board, and Lee, you've been at the Board meeting on top of it as well. But if you look at how FGX has performed. And I suppose you look at it from a shareholders' perspective and you look at total shareholder return, and that's what the share price has done plus the dividend you've got. And I think we've added in the value of franking. And over the last 12 months, they've made a little over 20-odd percent, which is a very solid return. And that's -- and part of that return is the fact that the FGX shares were trading below what the true value was. And now they're trading a little bit above what the true value was. And we'll talk about that a little bit later. And also, the Board thought -- look, let's come out early and announce the dividend just to give shareholders clarity. And that was $0.038. So that was for this -- so therefore, the sort of the 12-month dividend is double that 6% and a yield of -- what is that just a little under 6%. But that's fully franked. So if you gross it up, if you're in a super fund and you get the refund back or you don't -- you're in a low tax environment, then you're talking about, what is it, 7.5% nearly 8% -- so in the -- I've seen some questions coming in, but we'll talk about a little later in this -- in the new taxing regime where capital gains has sort of become a dirty word. Income is what people are looking for. And so it is a significant part of their return, particularly franked income. And so to me, I think that will go really well for FGX. And in terms of our ability to keep paying that dividend, it's been -- the last 11 years, there's been a consistent dividend increase and the fact that there's still strong retained earnings, a strong profit reserve. So for the ability for the dividend to keep going, it's -- I think it's got 5 years -- was it 5 or 6 years?

4.5 years.

Yes. Of profit reserve there for the dividend to continue to be maintained at this level or if the directors see fit to continue to increase it.

And still some franking on the balance sheet as well.

Yes. Yes, that's right. A little bit of franking.

Yes. Fantastic. Well, thanks very much for that, Geoff. I might give a quick update now on the portfolio. Just to remind everyone what our objective is with Future Generation Australia, and that is to deliver market or better returns, but to really manage the volatility of the portfolio. And I think we've mentioned previously on webinars that our portfolio has a bit of a skew towards medium and smaller sized companies. So you can see on the screen that we're a bit underweight the top 20. The top 20 are a big chunk of the Aussie market. There over half the value of the all odds. We're a bit underweight those. We're a bit underweight the next 30 companies as well. And we've got this bias towards medium and smaller-sized companies. That's where we think managers can add a lot of value. But when you look at our volatility, you can see that we've actually managed to reduce -- keep the volatility much lower than that of the market. So the volatility of Future Generation over its life has been about 15% or so lower than the all ordinaries and about 30% lower than the small ordinaries, so the smaller company index. And over that time, as Geoff mentioned, the portfolio has actually done pretty well. We've beaten the index by about 1% over the last year and 3 years and since inception. So the performance has been steady, strong and the volatility has been low. Now the way that we've achieved that, and we do talk about this quite a lot, is to make sure that the portfolio is appropriately diversified. Our model, as you may know, is to find great fund managers. We've got one of them here today to ask them to work for us for free and for you for free. And because we and you are not paying them fees, we're able to give 1% of our assets each year to some great not-for-profits. So we get those fund managers, we give some money to the not-for-profits, and we're able to give that money without having a negative impact on the return that our shareholders receive. In fact, we actually save more from the savings -- from the fee savings that we have than we donate. So that's the model. But the trick to the portfolio is to build diversification across the managers that we employ. So we've got on the screen, you can see the managers that we have there. There what we think are the best active boutique fund managers in Australia. We are very grateful that they work for us. It's extremely generous. Now they are diversified. There's obviously a lot of them, there's 16 of them. They're diversified in the ways that they invest. So we have long/short managers. We have long-only managers, small cap, large cap activist, systematic managers, all working for us and having different ways of investing. That's the diversification that we aim to achieve. You can see from the pie chart on the right that at the moment, the portfolio has a skew towards absolute bias strategies. Maybe just a word on what absolute bias strategies are. So the long equities that we've got there, they're managers who are looking to buy shares in the Aussie market that are going to go up more than the market itself. So they're trying to achieve performance, which is relatively better than the benchmark. The absolute bias managers have a few more levers at their discretion. They can hold more cash. They can sometimes take short positions or they are able to have a bit more flexibility in the way they invest. That gives them more opportunity to perform. And importantly, it also gives them the opportunity to protect capital if we do get a market wobble. And so our current portfolio is roughly 2/3 in the absolute buy strategies and 1/3 in the long-only strategies. If I look at how the portfolio is positioned from a sector perspective, obviously, our fund managers are selecting the companies in which we invest. Our portfolio is not through that diversification, mirroring exactly what's going on in the index. It's taking some pretty active positions. As you can see there, we have -- our managers have had a fairly significant underweight to financials. So as we said, we've been underweight the top 10 companies, the top 20 companies in Australia. We've been quite significantly underweight financials. And as you can see from the chart on the right, which is the 10 largest companies in the ASX, we have underweight positions in all of those. Not because we're taking a specific view on those companies, but we think the diversification that we can offer more broadly across the market gives us a better chance of meeting our objectives. So active positions are taken within the portfolio. And now as I said when I talked about the model, the real reason for doing this, aside from generating shareholder returns is to be able to make some impact and social good. And Future Generation Australia supports vulnerable children and helps them to thrive. As you can see, there's 11 not-for-profits that we actively support. Last year, we donated, I think, $5.7 million to some of those charities, which is a pretty significant contribution. Now sometimes in these webinars, we've had our not-for-profit partners to come and talk to us. We're actually going to separate that out. So you'll be receiving an invite in next month, actually in the next few weeks about a webinar, which my colleague, Bonnie will host where she and Jennifer Westercott will interview some of those social impact partners to explain the kind of impact that we're having and where they see their challenges. So we're supporting some pretty amazing causes, and you can learn more about them either from our website or at that webinar. As I said, we are able to donate significant amounts of funds to some of these great social impact causes. Over the life of Future Generation, $100 million has been donated. -- roughly $49 million worth of that has been donated from Future Generation Australia. And I think it was $5.7 million that we donated last year alone. So we are significant contributors to those social impact causes. We donate to them on an untied multiyear way, which gives them real flexibility and support, and we're very proud of that and our shareholders should be too. Now that's the portfolio update. Tom, I might turn to you now. As I said, one of our many generous fund managers working for free, super grateful that you do that. So thank you. You've had a great year. Would you mind -- and actually you've had a great several years, but would you mind just explaining how you invest, how you look at the market, your process and your philosophy?

Absolutely. So unsurprisingly, our ambition is not dissimilar from Future Generation Australia. What we're trying to do is outperform the ASX 200 year in, year out quite consistently and with low volatility. So that's what we're embarking to do. Now the one thing that is a little bit unique about the strategy that we're responsible for is that we are able to take position. So what that means is that we will short sell a little bit of our investors' money and reinvest those back into more longs. So for $100 that you give us, we might have $150 exposed to the market. And that might be $125 long and $25 short. So we're just creating a little bit more opportunity to hopefully make some money, which is important in a concentrated market like Australia. So ultimately, what we're doing there is we're just trying to find some stocks that underperform, reinvest those stocks that will outperform and hopefully outperform the market.

And if you look back over the last year, maybe longer, what are some of the themes or the positions that you've taken that have helped you to navigate them? I mean it's been a really volatile and difficult market, very narrow themes and in terms of the stock. So how have you kind of navigated that?

Well, the last 12 months is very fresh in mind, so I can take you through that because we were going through that a couple of weeks ago, and it's pretty remarkable. So if you think about the top 100 companies in Australia, I think 14 out of the top 15 stocks were material stocks, commodity stocks. I think AMP was the only one that was not a commodity stock. And so if you didn't own commodity stocks in the Australian market for the financial year to June, you had a tough year. It's pretty much as simple as that. Most of these stocks are up 60%. I think Pilbara might have been the top performer at over 100%. And then on the flip side, we had WiseTech down 70%, Zero down 60%, down 60%, Cochlear, CSL down 50%, 60%. These are household names. And so the divergence that we saw in the financial year to June was wild. And so fortunately, we were on the right side. We were a bit overweight the commodity sector, and they were definitely our winners. We avoided some of the big blowups. Unfortunately, we didn't have a couple of up drag on a bit of performance. But the reality is over that 12 months, that was the key. Interestingly, if we look at a 3- or 5-year view, the sectors that have worked have clearly changed. And I think it's a really important feature of our market. The concentration is very large, as we know, with banks and resources. But it's also a very highly cyclical market. And so it's -- in our view, it's not a market where you can set and forget. You need to be active because what works 1 year does not work the next. And I think fortunately, over the last 3 to 5 years, we've been broadly on the right side of some of those trends, which has helped performance.

And if you look at just taking that one step further, if you look at banks and miners from here, there's obviously a lot going on with the banks, specifically housing being kind of front of mind for a lot of mortgages, particularly. But banks and miners. Do you have any views now as to how -- I think I was reading that you're probably a bit more cautious on banks, but how are you thinking about that from here?

Well, yes, it does seem to be a little bit of divergence between the current housing market and CBA share price, which I think is $180 and nearly all-time high today. So we think the risk reward is unattractive to the bank. I think that's largely a consensus call. So we're happy to take that position to underweight the banks and obviously saw the sector positioning earlier from Future Generation. It sounds like we're aligned with a few of the other managers. So hopefully, we're on the right side of that at some stage, but the results season will be interesting to see. We've got a CBA result out in a couple of weeks, and we'll get an update from the other banks. So broadly underweight the banks. We don't see them as good money-making opportunities. The mining is a little bit interesting. So as we said, last year, we did well being overweight that sector. We've actually reduced that overweight, and we had a small underweight. And the reason there is the commodity markets, we see commodity markets sort of broadly fair. We don't think they're breaking out from here, and the stocks have done very well. They've rerated into that, and there's a bit of cost pressure. So the risk reward is a little bit less attractive than it was sitting here 12 months ago. So we've reduced our exposure. So ultimately, again, similarly to Future Generation Australia, we're looking outside those 2 sectors for where we think we'll make money going forward.

And where is that -- I mean you say there's other -- outside of those, the classic growth stock that people went to was CSL, which had a really tough year. Heard a lot of people. But where do you -- how do you think about getting outside of that where do you go? Is it just looking at sort of medium-sized companies and more different industries?

Yes. So we're underweight the top 20. We're actually overweight the next -- the 20 or 50. Again, our benchmark is the ASX 200. So we want to be alert to that. But ultimately, we're looking in other sectors. Health care looks interesting for the first time in our opinion in a long time. The fundamental valuations are attractive. Some of the companies are still working through issues, and you can see that in the share prices trying to bottom, and we might touch on a couple of those later. Some of the growthy names, the tech companies have been hit in the AI trade very hard. We think there's opportunities in there. So, it's really a sector opportunity set rather than necessarily a size bias. It's just a manifestation of the top 20 banks and resources.

So, when you look at the kind of concerns that are being raised in the press, inflation, growth, budgets, all those things that are dragging on Australia, is it valuation then that's throwing up some of those opportunities? Is that where you -- is it that there are sectors now which have been punished sufficiently well or avoiding some of those headwinds that have been a little sufficiently attractive.

Absolutely. I mean when we think about the aggregate market, it's -- we don't want to make forecast. There's not obviously a lot of upside in the top 20, which is obviously why we're underweight as you are as well. And so -- but we do see a lot of opportunities in our portfolio. When we look at some of these stocks, which are down 60%, and we see good earnings growth, we do see opportunities to make money. So it's less driven by the macro backdrop, which is really difficult at the moment and ultimately, the share price opportunities that we've been presented with.

Now are there any investors love to hear about specific companies, but you're prepared to share that we're not going to impose on your own intellectual kind of.

It would have been good if we had this yesterday of Rio as well. I don't want to say the results came out they're up 5%.

Well, it's interesting though, I mean, I'm not trying to be too risky in these sort of webinars, but the health care sector does look interesting. So, it's interesting. Everyone is familiar with the drawdown that we've seen in our health care names and the challenges that CSL had, the challenges that Cochlear had.

When the share price has fallen significantly.

And there's clearly challenges in those companies. But you look at a company like ResMed, which hasn't had the operational challenges, but the stock has also. And so it's actually been a global phenomenon. We've felt it pretty hard here in Australia because there's some of our true champions or health care names. But this is a global story where this sector has been sold for the better part of 2 or 3 years. And there's a number of reasons, but one of the main ones in our opinion is really it's been a funding source. And so the only game in town in terms of global investment is really the AI trade. And everything else is funding and investment into that. And so what we're seeing at the moment is the market start to question some of those trades. We're trying to get over our skis in terms of predicting what that will be in a 3- to 5-year view. But certainly, in the short-term, the market start to say, okay, well, maybe we'll take a bit of money out of here and put it into something that's more. And that's corresponded with ultimately valuations that fundamentally look attractive. So the health care sector more broadly looks interesting. Within that, we like Ramsay. It's a pretty boring name as you really name like Ramsay.

I remember when Ramsay started business in the old 25, 26 years ago. It was Ramsay and I think it was trading at could have been $0.80 like was exciting. Everyone thought was boring what does it go to?

I think Ramsay compounded at something like over 20%, 25% for 20 years. And then obviously you had a big drawdown over the skis in terms of investments offshore. But the new management team has been on board for 1.5 years. And sometimes these turnarounds can take longer than you expect and like big company. And so we think they were one of the first health care companies into the downturn if you think about the challenges post-COVID. And so they're starting to emerge. We're seeing some positive signs, a bit of margin accretion, really pulling back to their core management team is focused on returns, which we think is the right thing. And we've seen in the past, these sort of stories can give you a bit more upside than you might expect as you reinvigorate the core business and lose some of the stuff. So we think Ramsay look at we like that.

Well, you mentioned sexy trades, the sexy on AI, obviously, more of an offshore thing, and there's question marks over the CapEx and how overextended some of those -- the cash flow some of those companies are. Australia is probably a bit narrower in the opportunities for AI. Is it something that you actively try and invest in or see opportunities in, in Australia? Or any sort of views on how that might.

I think the opportunity for us really is that there have been a lot of stocks in our market, which have been hit very hard on AI fears. The SaaS is the biggest trade and stock some of the ones that I mentioned, Xero and Wira down 60% or 70%, a lot of it on fears around AI disruption. Now we ultimately think that AI is wonderful technology, but it may not disrupt these businesses in the speed that some of the market is starting to price. So ultimately, as an Australian investor, and we only really have the benefit of investing in the Australian subset. And so we don't have some of these wonderful opportunities that some of the international investors do. Our opportunity is to really take advantage of the mispricing in some of the businesses that have being disrupted. So we think that's also where we can see some opportunity in Australia.

Fantastic. Well it's interesting because it's like when you're talking about that, it might have been a little bit of the old -- the older people, the tech where I know this is totally different, but some of the companies that were sold down just significantly after that, which were good companies, good businesses and end up doing exceptionally well. But unfortunately, these pain periods and the real challenge is trying to work out the ones that are going to bounce back.

Agree.

And timing is always hard in these sort of things.

Yes. It can be difficult.

But when you look at the absolute valuation of these businesses look attractive.

Yes, particularly.

There's quite a few investment-related questions coming through, which look quite tricky. So I'll be forwarding those to you in a second. But before we do, you work for Future Generation for free, you have done for years. Like it always amazes me that people in our industry are prepared to do that. Could you sort of explain what drew you to Future Generation and why you're happy to support it?

We've been involved for a long time and really similar. Since the start, correct, Geoff. And that's been a great window into the process. And you think about investing, it's like idea generation and then execution. And in my view, now is what Future Gen is created, that's what's happened. The idea is obviously a great one and Geoff, but the execution has been fed. And we've seen that really -- I've had the benefit of seeing that close up. And that's really the discipline with which the team goes about its diligence around picking social impact partners. And then the benefit of meeting a lot of these social impact partners who just are very clear in terms of the difference of the money can make, the longevity of the funding, what that means for them and just the change and opportunity it can create. So we feel that we're a small copy it and ultimately, frankly, very likely to be a part of it because it's very impressive.

We're really grateful that you have been. So I might turn to some questions from the people online. So thank you for those questions. If you could keep them coming, that would be great. We'll get through as many as we can, and we'll follow up with those that we don't get to. The first one on my screen here, and just to forgive me, I've got the wrong glasses on to really read this, but I think it's Paul, talking about the collapse in discretionary spending, loans, New Zealand residential property market crashing, Aussie residential property bubble also seems to be deflating. How does Future Generation deal with their portfolios and manager selection and cash holdings? And how are the underlining managers refining their investment strategy for potential negative performance over the next few years given that backdrop. So I might just start with the Future Generation part of that question, Paul, is that we leave those sorts of decisions to the fund managers. We try, and I showed a slide before that showed that we've got 2/3 of the portfolio and absolute bias managers at the moment. The way that we try and manage risk is through diversification and making sure we've got what we think are the optimal mix of fund managers for the current market environment. And the fact that we've got some managers like Tom, who are able to take a bit more defensive positions when the opportunities are there too. It sort of probably reflects the investment committee's view around that. In terms of the risk of there being a negative return over the next few years of the Aussie market. I don't want to take that, on to either of you.

Is it one of the questions.

Yes. What's the probability of a negative performance over the next few years? I mean from a Future Generation perspective, we are built to be -- to manage volatility, to manage downside risk. Risk is the first thing that we think about. So we would hope that in a softer market, we would be relatively well placed to deal with that. But I mean, Tom, is there something that you need to think about like broader market type concerns, people with maybe a wealth effect that sort of causes people to take money out of the market, tax changes might.

It could easily be a very tough period. I mean what -- I'm not sure how old the person who is asking the question, but I'm probably the oldest in the room. You tend to find -- the market tends to adjust and the market looks forward. So I mean we -- and I think in the question, I talked about the consumer what's happened the last couple of months. I mean you saw the [indiscernible] result yesterday, and they said the sale or the day before their sales were down. I think in May, they were pretty much flat. In June, I think they're down 5%, in July they're down 4.6%. So like that if you're a retailer and your sales are down that much, particularly, they were probably having sales to get their sales volume up. That's pretty brutal. So -- and with property, who knows? We know that Australian property has been overvalued for years. Now the fact that demand side changed, where is the bottom. What you do find is markets tend to adjust reasonably quickly. And so I wouldn't necessarily expect -- there could be one bad year, but and you tend to find that what is an equity market? It's made up of bull markets and bear markets. And a bull market lasts for -- actually, I haven't looked at the average recently, but for a number of years, where a bear market tends to go for 1.5 years or a year or 3 quarters. So to me, the pain, you sort of go up in the escalator and down on the lift. So if there is an adjustment in the market, it tends to be quite swift. And in terms of being professional investors, that just creates opportunities for you. And as Tom was saying, some of those tech names concerned about AI. I mean they've fallen 50% plus some of them, isn't it? So it's been quite brutal. So what is -- do I expect there to be negative returns over the next 2 years in the Australian market? I don't see that. Do I see there to be enormous adjustment in the Australian market, you talked about tax, particularly over the next 12 months, I think people don't realize -- don't fully understand the capital gains tax on Australian business and Australian shares, how they're going to readjust their portfolios and the asymmetry of having a portfolio of shares rather than having a pool structure like an LIC or an ETF or a managed fund. It's effectively pushing everyone the 7.7 million Australians that have shares outside of Super that's pushing them away from owning shares themselves. So that's a big adjustment. Also, in terms of companies, how they pay out their earnings they make, there's an enormous change there because in the old system before this -- the new capital gains tax, which is effectively a doubling, but in real terms, it was -- capital was -- people wanted capital. If they wanted a return of, say, trying to get 10% to 12% over time, you want most of that is capital because if you're a student or retired and didn't work and you didn't pay any tax, your marginal tax rate is 0. So you're paying half of 0. So your capital gain was all in your pocket. If you're a maximum taxpayer, your capital gain was 23.5% is the highest capital gain you pay. So your return you want most is capital. These days, and we'll probably come back to this a little later, where does fit in this. I think there was a question you're mentioning about that. These days, now if you're a 0 taxpayer and the company makes money and pays tax and doesn't pay it out to shareholders, you're effectively paying a 51% tax rate because you get double tax, the 30% on the money it makes and the 30% of the 70% because you -- it doesn't pay that out to you. So you get a capital gain and you've got to pay another 30% on that. So you're paying 51%. Or if you're a maximum taxpayer, the 47%, you're paying 62.9% because you're paying the 30%. If it doesn't pay out, you're paying 47% of the 70%, so capital is a dirty word. And so what it will do for companies, companies need to pay out 100% all the money they earn, the incentive will be to pay 100% to shareholders, not invest back into the people that work there, not invest back in the business because if you pay 100% out to the shareholders like the 30% tax rate, the 70% you pay out to shareholders. If you're a 0 taxpayer, it's fully franked, you get the 30% back. So you pay no tax again. If you're a pensioner or a student. And if you're a maximum taxpayer, the maximum you pay is 47%, not 62.9%. So capital -- like the whole -- this will be -- unfortunately, it is just such a mess that the government is creating. And this is going to play out. People will start -- it doesn't come until the 1st of July next year. So as people sit down with their financial planners, as companies look at all those numbers and read the research and understand how they've got to allocate the earnings or the tax paid earnings, there will be a whole lot of adjustments, which -- what does that mean? It means it's probably good for larger stable companies that can pay out fully franked dividends. It's bad for the really small growth companies. But in a relative sense, but a small growth company can grow at -- okay, it might only grow at 300% rather than 500%. So to me, it's like a real big puzzle that's going to be -- have to be sorted out. All I know, unfortunately, from the Australian economy -- or the Australian economy's perspective, it's not positive. So it will adjust. And like to me, the great thing about the market is there's always opportunities.

We did a webinar -- this is a slight tangent. We did a webinar with Phil Lowe and Jennifer Westercott in this room not that long ago to talk about some of this stuff. And you're obviously leading the voice in pointing out some of the weaknesses in the legislation, but they were also quite vocal about the impact on productivity growth, entrepreneurship, all that kind of stuff. So it is obviously a major concern. I imagine from a market perspective, are you thinking about how that might impact things like consumer discretionary stocks. I think that's probably what David was alluding to, like consumer discretionary stocks, housing market prices, the wealth effect, credit growth that form part of your kind of thinking at the moment?

Yes, absolutely. I mean we saw Myer's results. Our feedback is retailers had a pretty tough July, as you expected, whether it's compounded that as well. But it's also compounding a rate backdrop, which is difficult. And when you think about some of the discretionary spend and at least the discretionary stocks, they really peaked in October last year. And that's when we had that surprise inflation print and it realized that we were not in a rate cutting cycle, we're in a rate rise cycle. And so we've had 3 rate rises at the start of this year in stocks like Harvey Norm, which is a bit of a bellwether, went from $7.50 to $4.50. Stockland went from $6.50. This is October last year, pre-budget and pretax changes to $4.28 to $14. So the bellwether cyclicals within the Australian market had already suffered a lot. And so obviously, the budget has compounded that and obviously working through that at the moment. The last thing I'll add, which is Geoff really highlight is the market is forward-looking. So some of these changes may change the rate backdrop. So there's always as simple as -- we like it to be silver lining to every playout politician.

There's quite a few -- just to keep going on this thing, there's quite a few questions. Stuart's one is on my screen right now about the impact that the budget will have on discretionary trust. Does that impact Future Generation Australia. I think the short answer is not a headline.

No, it doesn't. Well, actually, it's like the individual fund managers that we -- that manage the money on our behalf is there's no impact on them. The -- in terms of Future Generation, the listed entity, FGX is the company structure. So -- and it's a company structure that if you're getting like a 10% to 12% -- if you're looking at a 10% to 12% return over time, the gross up yields nearly 8%. So you're getting a significant amount of that as income. And ideally, what you want as an investor, you actually -- if you're going to get, say, a 10% to 12% return, you want the capital growth to be in line with inflation. So you pay no cash -- and then you want the rest to be as a fully franked dividend. So like Future Gen, we saw it with another -- with a WAM entity. We had a capital raising with WAM Income Maximizer yesterday, and there's been a lot of demand for that. We were looking at raising about $150 million. We had over $200 million of demand. And that was -- we had to close it early. We go over 2 days. We closed at the end of the first day and early on the first day. So there could have been a lot more demand. And we've seen in ETFs, people looking for income. I think ETFs in June was normally $860 million, I think it was the highest before, and it was $1 billion low and it was all into high-yielding products. For people that are watching this, be careful about going too much yield because you got to remember, there's -- if it's too good to be true, it's too good to be true. And there have been some instances in Australia where people are going for yield and they don't quite understand how the company is giving them the yield and then the company doesn't exist eventually. So but in terms of FGX, like everything is positive. The managers are still where they are. Their structures are outside this -- the tax changes. And -- yes.

So there's a few that have come through also on dividends and NTA. So Stuart asked about why we don't publish weekly NTA reports, which maybe I just sort of -- that would be a great thing to do. Unfortunately, a number of our managers they only report their performance and their numbers monthly. So we just can't -- we don't have the ability to do it more.

And this -- like they asked us that from a Wilson Asset Management perspective as well. And we do monthly, but we've held off on that because in theory, you can pretty much guesstimate what the NTA is. If you look at the last NTA adjusted by the index, depending on Australian or global. What we've -- and I've seen other listed investment companies that do daily NTAs. I know some of the big ones when they went to big discounts, they went from monthly to weekly NTAs. It actually doesn't help the discount at all. And in theory, to me, we don't want to get traders in there. We don't necessarily want to encourage people to be trading for $0.01 or $0.02. If they're happy with the managers, to me, that's your decision. It's like buying a company, isn't it? You're happy with the management, you think the company is cheap, you buy. And we want them to take a medium, long-term view.

And just further to that on the dividend frequency, I think.