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

My name is Geoff Wilson, and you've dialed into the FGX and FGG, that's Future Generation Australia and Future Generation Global webinars. This is your company, and thank you all for sending in a lot of questions. There are some really good quality questions, which we'll be answering a little later in this webinar. And in terms of what we've got today, I'll just give you the intro and I'll be around for questions and answers. But we have -- obviously, this seminar or the company is led by Caroline Gurney, who's joined us recently as CEO of the Future Generation Entities. Now we're incredibly excited that Caroline -- we're able to get Caroline to join us. As you'd be aware that we had a very extensive search for a new CEO. One of the best search firms in the world, like say, Egon Zehnder, was doing the work for us. And we're very excited to have Caroline join the team and really going to be the one that's leading Future Generation into the future. And in terms of the plans there Caroline, I'm sure will run through some of our plans. But from my perspective, it's very exciting what we're looking for, for both FGX and FGG going forward. Also, Martyn McCathie, who is an investment specialist with us. He's on the ICs of both FGX and FGG joined recently and he's been doing a lot of the numbers behind the scenes for quite a few years. So Marty will be joining us as well. In terms of the results for the year just gone, I think the real highlight has been -- in a market that's been very challenging and difficult at some points in time. And you look at the -- you've all seen the performance of the FGX and FGG in terms of the underlying funds performance. But to me, the real highlight was the ability to increase the dividends quite significantly. With FGX, it was an increase of 15.4% in the dividend and with FGG, it was a 200% increase in dividend. And it looks like with FGG -- I mean why are we able to do that? It was really the ability to work with the profit reserve, which the accounting -- FGG accounting team and the auditors had been going through the treatment of profit reserves and realize we're able to significantly increase our profit reserve. So with FGG, we've nearly got 8 years of dividend, and that's assuming the interim dividend is actually paid -- well, the final dividend is paid twice a year. So the next interim dividend in the final, let's assume they're the same. And with FGX, we've got about 5 years of dividends up our sleeve. So to me, that's a fantastic position to be in. Now we all know with listed investment companies, one of the drivers, the marginal buyer is a self-managed super fund. And that's one of the drivers is that growing stream of fully franked dividends. And so now we're in a position where both FGX and FGG. Now historically, we kept 2 years of dividends up our sleeves. Now we've really got a great scope to continue to grow that dividend over time and deliver that to shareholders. I mean both FGX and FGG are trading at discounts at the moment. My view is that's a great opportunity. And we're blatantly aware of that. And Caroline and her team working with the Wilson Asset Management team have got a really good strategy going forward. And I think it will just be a matter of time before both FGX and FGG reflect what they're true worth. The share price is well, and that's having them trading at NTA, if not a premium. And historically, you'd be aware, being medium long-term shareholders that both FGX and FGG have traded at premiums historically. We had a period there without a CEO and so really, it was -- it's great to have Caroline onboard now. I'll pass over to Caroline. And Caroline, if you can just give us a little bit of background for shareholders of your CV, I mean, probably just talking about the results and where you see the company is going.

Thank you, Geoff. So as Geoff said, I actually commenced towards the end of last year. And in terms of my CV, I mean, you can see it there on the slide. But I actually was working for UBS, which is probably one of the leading investment banks in Australia. And before that, I was with Citigroup. And I was really responsible for sort of telling the story to all of the opinion formers about what we were actually doing and what we were trying to do in terms of that position and helping our clients in terms of there -- with what they want to do and helping them achieve that. One of my greatest things, I think, was I set up the UBS Foundation in Australia, and I worked within Asia Pacific. And when I was running sort of the APAC comms and marketing team, looking at all their strategy about how we connected with our clients through, whether it's the private bank, the investment bank or asset management. And before that, I was in the U.K. and I was a partner at pretty much the #1 marketing firm there, which actually worked on a number of pension funds, a number of fund managers and a number of big sort of banks. So a lot of experience. But when I went on to FGX, which was 3 years ago, I loved it. I just love the fact that it was all about social investment returns. I mean it's such an amazing model, that whole passion with profit. And what I really want to develop, and I think really was there, and I think what you all believe in is that whole strategy of having the investment and getting a return, but also making a difference and making a difference in the sort of the social world and the not-for-profit world, which is also analyzed along the way you get with your investment returns. So our vision is to grow the funds once we're obviously trading at a premium. But now if we look at the slide on portfolio performance, I mean, to me, it's a great time with both Future Gen entities. We're entering into that period where we can pay an increasing dividend yield, which is supported by that strong profit reserve, as Geoff said, but we're also providing investors with that diversified portfolio exposure to those sort of Australian and global equity managers that you really can't get access to in many other ways. And thereby we're generating investment returns with less volatility, which I think is really important to the moment in these market conditions. In terms of the XGX (sic) [ FGX ] slide, as Geoff mentioned, looking at this profit reserve, $0.321 per share, that's 5.4 years dividend coverage and up, as Geoff said, 15.4% on last year. So the yield there is 4.5%. And this chart shows and the one on the following page is always about increasing those fully franked dividend. And I think that's really important because we need to make sure that we're increasing them at a regular base. And I think with FGG Australia, like they have been going up steadily since inception. And then if you look at the next slide, which is for Future Generation Global, I mean, as Geoff said, a 200% increase on fully franked full year dividend, you can see since 2016, where it's actually gone up in terms of those dividends. So now we're doing that interim and final of $0.03 per share that sticks, which is I think it's a really good story, and that's something we want people to be more aware of and to tell it better. So on the subject of dividend, it's something that we have just got, which is really exciting for us. We've just reviewed an analysis from JPMorgan on the performance of dividend yield paying entities in the ASX. So what that research shows is that shareholders who want to smooth the ride in especially these type of markets, should look at companies in the ASX that are paying a dividend above the market average. And this is because companies that pay above-market average dividend yields have found to be -- have found to be outperformed the ASX ordinaries on a 3-year, 5-year and 10-year basis. But they've also enjoyed significantly lower volatility from the benchmark index over those time periods measured by standard deviation. So with both FGX and FGG paying an above average dividend yield, we believe this positions the company for you as shareholders, much better for the future as well. So looking at the next slide in terms of the investment performance, FGX is really strong at 3.6%, 1-year outperformance; 3.2, 3-year outperformance; and then 2.5% since inception. FGG, I mean that -- I mean it's been -- what can I say, it's been a very tough 6 months for a few of us sort of key portfolio managers. And we've read about that in the newspapers, and this has had a knock-on effect. What I am really very happy with and is working incredibly well is this investment committee that we have. We've got some of the best asset allocators. And they're addressing this on a very measured and appropriate way and the way we actually look at our allocations to make those portfolio changes. So it's really important for us to deliver optimal returns to you so that we can also maximize our investments to our charitable partners, which I will come to later. At the moment with these sort of high levels of global market volatility and uncertainty, we've got this perfect storm, the pandemic inflation, major conflict in Europe. But I really feel and looking at the names of our firm managers, they've been top performers over many, many years. We've got every confidence that we're going to deal with the ongoing market conditions and continue to perform over the long term. And as said, what I think as a shareholder and owner of these companies, which you are, you're in a great position. We're announcing the 200% increase in our fully franked dividend and we're making that commitment to pay you that interim full year dividend for the first time in our history for FGG. And that's because of that very healthy profit reserve, and that's secured or ring fenced as you are by the company. So you have peace of mind as a shareholder that you have that dividend cover. So what is exciting is that FGG, which has mainly been a growth stock with not much yield is coming into its -- is going to provide shareholders with a very nice growing stream of fully franked dividends well into the future. So in terms of discounts, which Geoff made -- sort of made reference to, the discount to NTA, FGX and FGG to me, they look like good value. And I think having shareholders and believe in the medium- and long-term vision on the register is really important. It does take time to tighten up the share register. I mean I love the story that Geoff talks about in terms of WAM Research and out of all the WAM LICs Took the longest to trade to NTA 7 years. I'm determined there's nowhere going to be that long, but I think, and I take great sort of comfort in the fact that Geoff and his team have done it before, they'll do it again and we know what we're doing. I'm sure Geoff will want to add to that later. But I mean I think Marty will also go through the advantage of LICs, that consolidation in the sector, a growing shareholder base. And during 2020, when so many companies were cutting dividends, LICs were actually increasing dividends. But what we're also finding out from you is you want to hear more about what our portfolio construction is. So I'm now going to hand over to Martyn, who has just joined the Investment Committee after working on it for a quite a while to go through what that construction is. Over to you, Marty.

Thanks, Caroline, and thanks for joining us this afternoon, everybody. I guess, as Caroline said, I just wanted to take a few minutes to run through the portfolio construction of both FGX and FGG, and I guess at the forefront what we're trying to do with both companies is construct a portfolio of boutique fund managers and a blended portfolio that's given shareholders diversity. So I guess the role of the investment committee is to select those managers and those boutique managers that we think have demonstrated the ability to outperformance and value over time. And what we're looking to do there, we're looking at the construct a portfolio with market neutral and in the case of FGX market neutral in the case of both entities and absolute bias managers to -- along with the traditional long equity managers to provide shareholders with that reduced volatility. And I guess the benefits of that portfolio construction that we go through as spread of risk for shareholders. Recently, on FGX, we engaged JANA to compile some look-through analysis for us on the portfolio. And the reason we did that was twofold: One, we wanted to have clarity on the exposure that the portfolio has had from a security and a sector perspective; and we wanted to be able to identify and where possible, allow us to mitigate risk within the portfolio. I guess, the insights that we got from the analysis with FGX, we've blown an investment committee level, had a belief that we had a skew towards small, mid and microcap companies. And the analysis that JANA performed on our behalf has validated that and actually shown that the closure to that sector of the market was larger than we had originally thought. If you look at the composition on that look-through portfolio, we've got exposure -- we're underweight the ASX 50 by 44.4%, and that's largely driven by an underweight exposure to ASX 20 of 34.5%. So really, the FGX portfolio complements a basket of direct securities in that top 20 or top 50 complements that very well. The portfolio also provides shareholders with exposure outside of the ASX 300, and that's small, mid, micro cap range. And we provide shareholders with exposure to 20.8% exposure outside the ASX 300. If you look at the portfolio holistically from an FGX perspective, you're buying 1 share in FGX, gets you exposure to 533 companies that bask analysis. There's an active share within the portfolio and the active share is how our investment portfolio differs from the benchmark. So we are either over or under the benchmark weight, you've got an active share of 60.9%. So again, what you're getting from exposure to FGX, it's not a correlated return with the benchmark, so we can add value as we have, we can value to shareholders over time. It was exciting going through this analysis and then validating what -- how we felt the portfolio was positioned. But it's something we've long done for FGG. We run this analysis on a quarterly basis historically for FGG. And we've got similar insights there. And I guess from an FGG perspective, for me, the big takeaway is that if you're buying a share in FGG, you're getting exposure to over 350 companies globally. From a regional standpoint with FGG, you've got exposure to -- we're overexposed to Europe compared to the benchmark, about 30% overweight in Europe compared to the MSCI index. As our boutique managers look for relative value outside of the U.S. and the expansion that has occurred in the U.S. market. And within both companies, we're underweight financials. So it's definitely a diverse balanced portfolio, providing shareholders with that exposure to predominantly small, mid and microcap companies. Caroline, you want to pass back to you?

Yes. Thank you. So there, you can see a slide with some of the -- for me, some of the best fund managers in Australia and globally. And these are the ones that manage your money and they were pro bono, so you -- there is no management or performance phase for us, and we get to give that 1% to the charities. I think it's really important to recognize the managers because they do work incredibly hard. And that way, we get that sort of diversity, investment strategy in style with that sort of reduced volatility by the way exactly Marty has talked in terms of mixing them. And also, I should thank our service providers that help us pro bono as well. So just going on to our social investment, that, for us, is incredibly exciting. We have 18 charity partners and they look at children at risk and youth mental health. And for Future Generation Australia, last year, we gave $5.3 million. And that totals up to $26.8 million since inception to those charities and many of it has been over multiyear, which is really incredible for charities because they never -- they don't often get that kind of commitment for them to grow what they're actually trying to do in that youth mental health space. Future Generation Global, that $6.4 million, we wrote out the money last year in November, and that was $26.2 million since inception. And once again, that for FGG, it's been -- it's been sort of an amazing ride, but we're actually now changing our strategy there with our social investment strategy. So we've just done an expression of interest, which has gone out across February. And that's basically we want to partner with charities to prevent the onset of mental ill health among young Australians, which we believe is there is a severe need for that in terms of that prevention and well-being space. Pleasingly and too much to our surprise and to many others who've spoken to in the sector, we've got 174 applications from not-for-profit organizations across Australia. Many were community-based aboriginal controlled organizations then in the delusion space, many fiscal programs and many others, and they are really providing us with quite a fascinating insight into the great programs that are currently being run that hopefully, we can partner with them in the future. So in terms of the partners, when we announced them in August, we really want to introduce them to do. So we'll do another webinar or hopefully, we can start doing more face-to-face, which we're looking to do in a couple of months with you all as well. But if you want to know more about our social impact, we have a document on the website for both of our companies. So please do have a look. Thank you very much for joining us today. I'm now just going to hand over to Geoff for any closing remarks, and then we'll move to Q&A. But you'll have our phone numbers. So if you want to talk about anything, please do call.

Yes, thank you, Caroline, and thank you, Marty. As I said earlier, this is your company. So please, any questions, any thoughts or any ideas -- it's great to have Caroline on board with -- as you go -- went through her CV, really a wealth of experience. And we're systematically working through a new strategy for both FGX and FGG. Now some exciting things happening with FGG, as Caroline just mentioned, in terms of on the youth -- really -- that we're trying to support youth. I'm thinking of youth at risk for FGX and youth mental health for FGG. So to me, I'm pretty excited with what's happening there. That's on the philanthropic side. And as Marty said, we've really got the -- yes, we've got this -- what we believe or the investment committees believe are the best and the smartest boutique fund managers in Australia and globally that can add value, managing the money on your behalf. So it's a pretty good mix of cocktail that will perform over time. Even though there are periods where things can be pretty difficult. So why don't I pass over to Zoey, who I think is going to take us through the -- from the corporate affairs area, who's going to take us through the Q&A.

Thanks, Geoff. And we've already had a few questions come through. The first one is for you, Geoff, and it from Kim, and she said it's fantastic to see the dividend increases. Is there scope for the dividends to be increased further due to significant profit reserves and the years of coverage?

Yes. I mean, very smart question, Kim. Obviously, they are Board decisions, but the plan will be to grow the dividends. What -- someone might ask the question is, well, why don't you double the dividends again in the short term? It's a balance about having the profit reserve, but also having the franking. And the franking comes over time when we pay tax or when we get distributions from managers that we pay tax on or the distributions from the managers where they have invested in Australian companies with FGX that pay fully franked dividends. So we've got the profit reserve there, which is -- and that doesn't go away. Like if the NTA drops, once you've provided the profit reserve, that stays. So the 32 and 48 odd cents that we've got in either entities as profit reserves, they stay. So the ability to pay those growing stream of fully franked dividends. Doesn't change depending on how the portfolio performs.

Perfect. Thanks, Geoff. And sticking with you. This next one is from Chris. He says thank you for hosting the webinar. And he's asking, can you tell us a bit more about how you're aiming to narrow the discount?

Well, with listed investment companies -- and thanks we're starting off with some good questions. Probably a couple of the most relevant questions. With listed investment companies, it is, in the end, supply and demand. And as Caroline talked, well, first of all, what needs to be done? And what's an example of how we've done it, and I'll touch on that. In terms of what needs to be done is effectively the share register needs to settle down. So the group of shareholders that are on there all want to be shareholders. So -- and Caroline mentioned about tightening up the share register, and that's the term that we use. So effectively, it's to -- anyone who is sort of a doubting shareholder and the great thing -- when markets do fall and there's a lot of uncertainty -- that does -- that shakes out the shareholders that aren't a believer in what -- or don't want to be exposed to whatever the company is exposed to. So to me the recent volatility in the market is actually a positive for medium, long term for the shareholder base. So you need the group of shareholders that want to be there and you need to communicate with them and have a real marketing, shareholder engagement and communication strategy and then to drive new shareholders into the company. So then I mean, effectively, you -- when the amount of buying and selling is sort of equal around NTA, that's equilibrium. And then when you've got more buyers and the people that shareholders don't want to sell, now that's when you move back to premiums. And FGX and FGG, they've been a premiums and discounts since they've been listed. I think when Marty did the numbers 6 months ago, I think they averaged about a 7% or 8% premium over time. So it's only a matter of time, and we need to do that. And in terms of WAM Research, which was off the WAM table, that's the one that took us the longest to get it to trade the NTA. And because we were really making sure that they're only the people that believed in the story and fully understood what we're doing remainders shareholders where the others sold over time and the ones that sold, new people bought them that wanted to go along for the journey as we've sort of articulated it, or what happened there is the share register tightened right up so very little -- very few of the shareholders wanted to sell. And now when I looked at a couple of weeks ago, it was trading at nearly a 45% premium to NTA. Now that's as crazy as the FGG trading at those 12% and 14% discounts. So to me, it just provides an opportunity. You're getting $1 of exposure to the market and you're paying, say, $0.86 or $0.88 and you're getting a dividend yield on that dollar. So that's broadly what -- how you do it.

Thanks, Geoff. Staying with you. This one is from Gordon. He says it's exciting to see the 200% dividend increase and the move to twice yearly dividends. But can you talk a bit more about FGG's performance?

Yes. The FGG performance has been tough. Yes, we've really got what we believe are a first-class group of managers, and we've got an investment committee that looks at them very diligently. In terms of managers, I think I've both FGX and FGG's life, I think we've removed [Technical Difficulty]. So if any manager -- if there's any -- if there's underperformance, consistent underperformance, if there's major personnel changes or they're managing the money differently than what we expected, then obviously, they come up for review. And then we decided whether we change the allocation or remove the manager totally. So and a number of the managers were changed allocation. So to me, it's just a period where some of the managers have had a -- they're boutique managers, and they're prepared to take reasonable risks with their money and also our money. And the last couple of months, it's been challenging. Does that mean you change managers? What we try to do is both investment committees is we're trying to take medium-term views. What you tend to find is if you sell -- if you redeem from the month, the worst performing manager and put it in the best performing manager, then very soon, the roles will be reversed. So it can be quite cyclical. Obviously, if any manager is underperforming over an extended period, then they come up for review. And as I mentioned, we've removed a number of them if required, and we're very happy to do that. But both investment committees, we're very happy with the managers we've got at the moment.

Thanks, Geoff. And another one for you, this one is from Lisa. She says FGX performance has been impressive. But can you explain the rationale behind the options issue and what's happening there?

Okay. Look, thanks, Lisa, for saying the FGX performance has been impressive. As one of the team, of course, we'll accept that. And Marty just joining the Investment Committee will accept that. And Caroline, new CEO, she'll accept that. So thank you. In terms of the option issue, the logic behind the option issue was -- it was effectively -- what an option issue is, you're creating another piece of paper and you're giving it to all shareholders. So it's on a pro rata basis. So it's given it to everyone on the same ratio as you on share. So it's a very fair way of raising capital. And what the option does, it's not like a rights issue where you have to put the money in over sort of a 4- to 6-week period. An option issue really means that the underlying portfolio or the underlying company has to perform like the FGX -- NTA has to perform, otherwise, we won't get those options exercised. So it's just not a free kick you're raising money just because you want to. You're creating a piece of paper, you're giving it to all shareholders very fairly. They can decide what they want to do with it. Like some people sold the options and took that as another little dividend. Some people sold their shares and bought the equal amount of options. And what that meant is they had the same upside but it reduces the downside. So it's another piece of paper that creates flexibility for shareholders. And if FGX performs, then it raises more money. And also, it's broadly a rights issue over 1.5 years. So it's really up to FGX to perform. And then you as a shareholder can decide do you want to exercise those options or don't you? So it's [Technical Difficulty]. To me, it's equitable way of raising capital over time.

Thanks, Geoff. And we'll move to Marty now. This one is from Ian. He says, could you please explain the changes to the fund manager portfolio and your fund portfolio investment rationale going forward? He also serves to keep up the good work, Marty.

Sorry, I missed the question there. I just had a cutout. Can you repeat that again? Sorry.

So this one is from Ian and it's for you, Marty. And he says, could you please explain any changes to the fund manager portfolio and your fund portfolio investment rationale going forward? And he also said to keep up the good work.

Thank you. Thanks for the question. On the portfolio change, I think Geoff touched on it there. Over the life cycle of FGX and FGG, we have removed or parted ways with 16 managers, and we've invested into 11 new managers over the 7.5 years. So we have been active in turning managers over. More recently, over the last 12 months, FGG had on exit from Avenir Capital, and they closed as their business as we were exited. But obviously, the committee are continuing to look at potential new managers that come across. We are approached from inbound queries regularly for managers that want to be involved with FGG and FGX and they're obviously part of our process is ensuring that we're picking the best managers and the managers that they complement each other -- one another from a portfolio construction perspective, but also have that track record, neither investment process and personnel, they can add value and performance to our shareholders.

Thanks, Marty. Staying with you. This one is from Barbara. She says, can you tell us a little bit more about the ESG and the funds?

Yes. Great question and timely as well. Obviously -- well not obviously, they're looking across both portfolios, FGG, FGX. We have no exposure in either portfolio to weapons or ammunition and we got no exposure to tobacco. We do have exposure in both portfolios to casinos and gambling, alcohol and beverage and a little bit of brewers as well in there as well. What's been pleasing for me is I've sat alongside the investment community for the last 7 years and worked with them and our managers has seen that structural shift in the adoption and the approach more broadly in the fund management industry to ESG. And what's been really pleasing is the number of FGX and FGG managers that are proactively implementing ESG policies or become in signatories to UN PRI. And for us, I guess, our role there as a manager of managers at the committee level is continuing to engage with managers and have those conversations. So obviously, a topic and a subject that has a lot of airspace at the moment. It's a hot topic and helping facilitate that momentum where we can with our underlying managers is definitely our role there moving forward.

Thanks, Marty. And this one is for Caroline, from David. He says, can you explain more about FGG's new social impact strategy?

Sure. Thank you. For me, that's a great question, mainly because is very much part and the sort of differentiation in terms of what we do, the social impact base. So with FGG, we actually put out an expressions of interest in February, asking across Australia for not-for-profits to put forward whether or not they would like to partner with us. And we're actually looking at choosing probably 10 to 15 charities, and we're going to tier them as well because some partners want a small amount of money for a longer period of time and they want to work on something and they can pilot it. And some want more money to actually do something on the organizational side. So at the moment, we're just filtering through the -- I mean we're just -- basically, we have a number of fantastic people that actually may grant applications for other big charities. And we're working with them to actually sort of bring that list down to sort of a manageable sort of 40 and then we'll sort of take it from there. But so far, it's just been amazing looking at them in terms of some -- all the way from Adelaide, Western Australia, and a number from Melbourne, a number from New South Wales as well. So we're just getting that real variety, which we really, really hoped because we really want to make sure they're sort of geographically spread or to make sure they're community-based. And we also do some with tax, some maybe with film. So we actually sort of fit a jigsaw puzzle. So we can bring them all together and then we can measure their impact and put that within a framework, so then we can also talk about best learnings and then sort of help that -- utilize that in the space as well. So in August, we'll announce them all. And hopefully, you'll be with us to find out more about those charities. But just look on the website, we'll be keeping -- putting updates on that and we'll do probably a letter to shareholders before that time from our social impact manager to actually give you an update as well.

Perfect. Thanks, Caroline. And staying with you, this question is from Andrew. He says, you've just completed the FGG expression of interest. What are you expecting to see from that?

Well, it's very much in terms of the same area. I mean I'm just really hoping that we're just going to get a really diverse range of applications and that we can actually work with them and make sure they want to partner with us, and we can really make some insightful change.

Thanks, Caroline. And Geoff, we just had a question coming through from Bernard. He says, what is the current discount to NTA? And how can he determine this daily when he's picking opportunities?

Why do I get all the good questions. Good question, Bernard. Okay, well, the current discounts, Marty, if you got the figure -- we're talking earlier, if you got the figures there at your fingertips?

Yes, I do. So current discounts live as a close of business last night. FGG was a little under 10% discount and FGX round about the 9% mark.

Okay. So I was a bit -- I was looking at old data when -- okay, so FGG is about 10% and FGX is about 9%. Okay. Now so in terms of -- what you do is you look at the NTA and broadly, you've got to adjust -- you've got to have it an estimate. And like a lot of brokers that follow the listed investment company space, they do them. But say with FGX, you'd say -- you'd look at last month's NTA and you'd look at how the -- since the end of that month, how all ordinaries has performed. And like if it was up 1%, then you'd assume the FGX portfolio broadly was up 1%. It was down 1%, then you'd assume it was down 1%. So -- and that would be your assumption for the NTA. You won't be too far wrong. Now even though like over the last 12 months, FGX has outperformed the market, so that would be a positive for you if you're buying. And if FGG unfortunately has underperformed, we believe going forward, that will change over time. So -- but broadly, if you adjust by the movements in the market by the -- from the end of the month, that's the best way to do it. And if you have any questions about it, just ring Marty. I mean, someone's asked us before -- just to follow-on question you probably want to ask is, well, why don't you announce the NTA on a daily basis? And I actually don't think that helps the company. Now there are a few LICs that announced daily NTAs. I mean one -- we had been shareholders in now that's WAM strategic value or WAM capital in the old days, when we buy our positions in LICs trading at discounts, was the perpetual LIC, the equities LIC. They do daily NTAs, but most of their lives, they've traded at a discount. So it doesn't necessarily help. And one of the negatives about I think daily NTAs is it sort of focuses on short-termism. To me, the decision you need to make, obviously, we all want to buy $1 for as cheaply as we can. Like again, unfortunately, I was slightly out with my numbers. You're buying $1 for $0.90 with FGG, and you're buying a $1 -- so you're paying $0.91 for $1 in FGX. So we all want that -- the value investment. But by doing it on a daily basis, what you tend to do is find people that really want that short-term trading opportunities. And I gave you the example of WAM Research. And that's -- when you tighten up a share register, it's really making sure that, effectively, everyone who's invested is comfortable with the sort of what they've invested in. And then you find that not many of them want to sell. And then what happens is you end up trading at a premium. And so that's what our goal is. So to me, if [Technical Difficulty] negative for us getting share prices to trade up at NTA or if not premiums to NTA.

Thanks, Geoff. And we'll go to Marty now. And this is a question from David. He says, can you share the top 10 holdings in FGX?

Yes, good question, David. At the moment, I can't for FGX. For FGG, we do publish the top 10 holdings, our weight, the benchmark weight and our active weight within the annual report, within the Investment Committee section of the annual report, and that was released last month with data as at September 30. Obviously, with the FGX managers that we have in there, I guess, the question is why have we only just started cutting this analysis on a look-through basis for FGX, and we've been doing it for FGG since inception? And the answer to that question is the FGX managers domestically focused, they're probably managing a bit more money in relative relation to the capacity that they have, which means they're a little bit more sensitive about their data and their information. So for us, we get that data provided to a third party. But when we get it, it's on a no-name basis, and it's at an aggregate level, it's at a set our industry level, any securities that are significantly over underweight benchmark. But we don't get the actual holdings off the top 10 that we've got exposure to. And that's just take that data of those domestic managers, a number of which are obviously competing in the same space as Wilson Asset Manager who obviously support FGX as well.

Thanks, Marty. Back to you, Geoff. This is a question from Steven. He says, how do you consider showing the net performance figures, including the discount and premium charts in the monthly updates?

Yes. I mean, it's a fair point. The net performance is gross performance as well because there's no management fees or performance fees. But the -- and showing the discounts and premiums. Yes, look, we'll take that onboard. In theory, doing it on a monthly basis, maybe on a quarterly or I mean we definitely do it on a half yearly basis. Yes, we want to take that onboard. What effectively, sometimes you don't want, obviously, you want people to understand a great investment opportunity. But what I've found historically is companies that every month, they're sort of focusing on the discounts or premiums and really -- again, it can be counterproductive in terms of -- for both FGX and FGG, we're of the view that they won't be a discount for the medium to long term. So it's just more a shorter-term aberration. And we don't want people to be thinking well, they're always discounts because probably historically, when I go back a little while when both trading at premiums and then people think they're always a premium. So to me, the great thing about the listed investment company is there is the opportunity for people to do a bit of homework and it does create value. So -- but we'll take that onboard and we'll definitely [Technical Difficulty].

Thanks, Geoff. And we'll stay with you now, and this is with a question from Alan. He says, is there a connection between on market liquidity and LIC discounts and premiums?

Yes. I mean, I'll tell you what, we're getting high-quality questions today that's really good questions. So thank you. So the question is, is there a correlation between liquidity and listed investment companies and discounts and premiums. Is that -- was that the question?

Yes, Geoff.

Yes. Actually, Marty, can we actually have a look at that? Can we do the numbers on that? We've done a lot of numbers. There's definitely a correlation between size. You look at -- the largest LIC is AFIC, the second largest LIC is Argo. The third largest LIC is WAM Capital. AFIC, when I looked a couple of weeks ago, that was trading at about a 14% premium. Argo, again, a couple of weeks ago, when I looked, it was about a 7.5% premium and WAM Capital was a 20% plus premium. And you tend to find the those -- and then you go at the other end of the scale, the really small LICs, they tend to trade at a discount. Now there's some [Technical Difficulty] with a market value under $200 million. So I'd assume if you're larger, there's going to be more liquidity. So therefore, if there's more liquidity and you're larger, then there is a premium and discount impact. I mean -- and I suppose the interesting thing is of the 3 largest LIC, WAM Capital is probably the most liquid of 3. It tends to trade in -- there's always good volume being traded. And that's -- of the biggest 3, that's the biggest discount -- biggest premium, sorry. So I think there is -- there definitely is a correlation. I think it's a strong correlation about capitalization because I think you find -- and one of the reasons why that's there is like a financial planner, if they want to put -- say they like the LIC structure, they like the growing stream of fully franked dividends for their self-managed super fund clients and say they decide they want to put like 5% or 10% of their clients' assets into this LIC, then if there's only like $10,000 worth of stock traded at a day, then they're not going to bother. Now if there's $1 million or $2 worth of stock trade at a day, then they can buy it over a week or they can buy it over a couple of days or a couple of weeks. So to me, there is definitely a benefit of having size and liquidity. And that's another reason why with FGX and FGG as they listed, our focus is to grow them. And in theory, what we're hoping is that gives -- that helps to get to a premium as well. But we're going to grow them on behalf of all shareholders.

Thanks, Geoff, and we will stay with you. This next one is from Alan. He says the options have been falling since issued. Does this cause a downward pressure on FGX's share price?

Yes, Alan, it doesn't really cause a downward pressure on FGX's share price. If the options are in the money, then they would with the exercise price of $1.48, so they're quite a way out of the money. So the reason why the options have been coming down is actually because the share price has been coming down because the market has been coming down. And even though as one of the earlier questions to congratulating us for the great performance of FGX in terms of versus the market.

Thanks, Geoff.

[Technical Difficulty]

Sorry, Geoff, I think you are cutting out a bit.

Sorry, Zoey, is that's good?

We can hear you now.

Great. Do we get the answer to that question?

You might need to repeat, apologies.

No problem. Just technology. The reason why the options have been -- option price been coming down is because the share price has been coming down, and the total value of the assets have been coming down. Even though FGX has performed very well as one of our earlier shareholders congratulate us for the outperformance. The fact is the market has been -- has come off recently. And like the options might have any negative impact on the share price -- until the share price in the money, and that's $1.48. So there's no dilutionary impact until the share price is trading above $1.48.

Thanks, Geoff. And this is the final question for today, and this is from Andre. He says, can you foresee a future where it's going to be difficult to find pro bono managers?

Not at all. No. One of the great things about both these products is the incredible generosity of all the managers. And as Marty said, we have managers coming to us wanting to manage money pro bono. I mean that's great they come [Technical Difficulty] we decide who we want to invest in and we go to the people. It happened to be someone who was saying obviously, we know that they'll give us pro bono [Technical Difficulty].

Geoff, unfortunately we're losing you a bit.

Yes, it's just -- am I back or have still lost. Marty, can answer that.

Perfect. Thanks, Geoff, and thanks for the question. I guess to touch on what Geoff was saying there is no, we don't foresee that being an issue. For us, the model of FGX and FGG for the fund managers is really -- we're asking them to manage a little bit of capacity on our behalf within a product that they've already got an investment strategy that they already have. So for them, it's no additional work really. It's a little bit of capacity. It's work we'd be doing anyway. So it is very little effort for them. But what they get from it the other side in the funds management community is obviously their ability to get back and have a purpose and be attached to that element of it and that's social element. So a lot of our managers or all of our managers are highly engaged. And since inception, I think we've talked about it, there's been 2 managers that have said no, and 1 is actually then turned around and provided us with capacity. So since inception, there's been 1 no, and that was only because they had no capacity that you could give to us that already closed down. So we definitely don't see an issue going forward.

Great. Thanks, Marty. And I'll try and pass to Geoff for closing remarks.

Maybe we should pass to Caroline for closing remarks. Can you hear me clearly Zoey?

Can now, Geoff, you're back on...

Look, thank you very much. Obviously, it's been -- it's a tough time for everyone with these floods in Australia and just the downpours. And obviously, there's been a bit of technology problem on my part, I'd assume there's an nbn connection that's clogged up with a bit of water somewhere. So apologies for that. And also what's happening in Eastern Europe. It's a very challenging difficult time and with COVID. So thank you, all our shareholders. Thanks for your support. We're here to -- because we're passionate about what we're doing here. We think it's -- now there's a couple of great opportunities with FGX and FGG. If anyone has any questions or comments or suggestions, please, it is your company and please feed them through to us. So on behalf of Caroline, the Board, Marty, Zoey, myself, the whole team back at Future Generation headquarters. Thank you.