Australia’s got to be the best place to live in the world doesn’t it? It’s a great place to invest too. Well, it’s certainly been very good to me and my clients over the years. That’s not to say that there aren’t great opportunities in other markets of course. Some of you already play offshore, but it’s that bit harder to do from a different time zone, without the same level of contacts and company knowledge.
So when the team at PM Capital starting talking to me about Paul Moore’s plan for a new global product, I was certainly interested. Paul is no stranger to global investing. He’s been doing it for a long time and importantly, doing it well. It takes a lot of late nights watching screens in other time zones and of course a heap of travel too. He does the hard yards on this front, but it really requires a team and he’s got a good one behind him.
Paul’s got an innovative investment mind and it shows in the design of his new product – GO 2025. It stands for Global Opportunities and 2025 is the end of Paul’s ideal investment horizon of 7 years. The fund will be listed and pay semi-annual dividends targeting a 3-4% yield (plus franking).
But where’s the innovation I hear you cry! Well, the fund will be listed and tradeable like any other stock on the ASX, but with two key differences. Either, investors can choose to redeem their holding based on the prevailing NTA (net tangible assets) at the maturity in 2025. This prevents investors having to sell at a discount to NTA, as can sometimes be the case with similar securities. Or, otherwise the securities will convert into the shares of the parent entity PGF with full capital gains tax rollover relief. This conversion is also to be done at a ratio of the two securities’ NTAs…so there is no dilution!
I reckon this redemption/conversion mechanism will also prevent the stock from trading at much of a discount through the 7 years to maturity too. This is a new idea, so there is no precedent, but it makes sense don’t you think?
You know what I also like about this one? Investors are sitting right alongside Paul and the team who are also invested in the fund. Sure there are management fees. Those travel expenses need to be covered and investment expertise isn’t free. But Paul and co will manage this like it’s their own money, because it is. They already have nearly 9% of the register in PGF – that is a house investment of over $40 million! That kind of alignment of interests gives me a lot of comfort in recommending the product.
Oh and by the way. The several million dollars that it costs to establish something like this? PM’s got that covered. Other products of this nature have previously paid the costs out of the fund itself, which gives the NTA and the share price a kick in the guts on day one. There’s no such issue here.
I like this aspect too. Not just because it protects the NTA, but also because it will take quite some time to recoup those costs through the management fee. This further incentivises PM to treat the fund with the care that is required for sustainable, long term performance.
Interested? Give me a call and I’ll chat you through it in more detail.
Go Go Go GO 2025!