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Future Generation Investment Company listed in September 2014 and Future Generation Global Investment Company Limited listed in September 2015. They are philanthropically-focused listed investment companies (LICs), built to create wealth for shareholders through long-term capital growth while respectively providing diversified exposure to Australian shares and global shares.

Their two portfolios are managed by leading fund managers, but they don’t pay management or performance fees. All other service providers to the companies such as ASX, lawyers, accountants, banks, systems providers, advisers and research companies work on a pro bono basis.

Caroline Gurney, Future Generation Investment Company
 

"We put a lot of work into curating the list of fund managers we work with, and the charities with which we partner." 

This allows each company to make an annual investment of one per cent of its average monthly net assets in Australian charities that focus on children and youth mental health. Between them, Future Generation Investment Company and Future Generation Global Investment Company have generated almost $66 million in contributions to charities.

Separate to this cash flow, since inception Future Generation Investment Company has delivered a 10.5 per cent a year increase in the value of the investment portfolio to 31 March 2022. Future Generation Global Investment Company has posted a portfolio gain of 8.4 per cent a year. The investment portfolios’ performance has been achieved with less volatility than their indices, as measured by standard deviation. “It’s an approach to wealth creation which demonstrates that both shareholder and social returns can be achieved together,” says CEO Caroline Gurney. “It’s an investment with demonstrable social impact and benefit, and we’re very proud of it.”

Gurney says the companies are structured to diversify shareholders’ investment exposure, and their charitable giving. “We put a lot of work into curating the list of fund managers we work with, and the charities with which we partner. In both companies, we feel that instead of shareholders having to look around for the best of both managers and charities, we’ve packaged it up for them.

“In both investments and charities, we continue to learn how to work with partners, where we can add value with our resources, expertise and networks and changes we trigger as we increase the amount we invest,” she says. “We have an ongoing engagement with our partners about how our funds can best support their priorities and the needs and opportunities of the young people with which they work.”

An example of adding value on the investor side is a recent study of the active share of the Future Generation Investment Company portfolio, conducted by asset consultant JANA. “T hey have done an amazing look-through of all of our fund managers, bar one, and has looked at 533 different securities, with an active share of 60.9 per cent. So, only 39.1 per cent of our holdings overlap the index. That level of information is quite unheard of in a fund-of-fund structure, but we’re trying to explain to investors what that means and how it benefits them.”

Gurney’s role is to focus on promoting the unique investment model of dual investment and social returns, and to maximise shareholder engagement. As a standard-bearer on ASX for impact investing, she feels a responsibility to be extremely proactive in communicating with shareholders and potential investors, but also with financial planners, the analysts that rate LICs and the charities with which the two companies partner.

“Certainly, there is a house view, the Wilson Asset Management view, going back to Geoff Wilson, who founded the Future Generation companies, that the more you talk to shareholders and potential investors about what you are doing, the more likely they are to want to stay with us on that journey, through the ups and downs. And, obviously, as listed companies there are obligations in terms of communication with shareholders, but we also believe your obligations in terms of ASX rules should be considered the bare minimum.”

Gurney says people have so many options in terms of what they can do with their money, you have to give them a reason to stay with you. “Most of our shareholders are very specific about the type of investment they want to be in. We have high-net-worth individuals, we have self-managed super fund trustees, we have investment committees of charities and other organisations and then we have mum-and-dad investors. It’s a diverse investor base and each one wants different things. You have to cater to each of them.”

Gurney’s primary investor relations focus is to educate the Future Generations companies’ shareholders so that they remain with the business. She regularly updates them on performance, profiles fund managers investing shareholders’ money and highlights the benefits of their donations.

“I come from a marketing background, and I have always believed communication is crucial. That means communication to all your opinion-formers, whether it be to shareholders, financial press, influencers or politicians. All of that is in our strategy,” she says.

Each month, Future Generation provides shareholders with a podcast, insights from the investment committee video, webinar and investment update and quarterly social impact insights document. Gurney also travels to major cities across the country to meet shareholders and give them the opportunity to hear from some of Future Generation’s pro bono managers and charity partners.

Rather than just talk to shareholders and potential investors, Gurney says Future Generation wants to emphasise the dual purpose of investing to create wealth and make a meaningful impact. “We want to educate and challenge shareholders and investors on that score.”

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