Trading Recommendation: Short term if discount is at least 2% greater than recent (1 to 6 months) average. Minimum discount advised is 5%.
Actual Performance:
In its Feb 2019 monthly report FGX reports an Inception To Date return of 8.6% before expenses, fees and taxes:
Using Excel's CAGR formula I've computed the actual Inception to Date (ITD) performance using the Starting NTA ($1.0625), 28 Feb 2019 Pre-tax NTA ($1.196), Dividends (14.8 cents), Franking (6.35 cents) and Option value at expiry (0.5 cents).
Actual Compound Annual Growth Rate for Pre-tax NTA: 6.66%
- This is a considerable difference to FGX's published ITD (p.a) of 8.6%
- FGX is not long only and has less risk exposure. E.g. As of 28 Feb 2019 it was "43.4% long equities, 33.7% absolute bias, 13.0% market neutral and 9.9% cash."
Actual TSR Comparison with relevant benchmark ETF:
Using Sharesight and a performance report period of 30 Sep 2014 to 28 Feb 2019 you can accurately determine like-for-like Total Shareholder Return annualised performance between investing in the FGX at commencement and investing in the closest index fund to the benchmark.
- FGX has an annualised TSR of 7.48%
- VAS has an annualised TSR of 8.42%
Performance Impact on NTA Discount/Premium:
The difference between the VAS TSR of 8.42% and FGX's 6.66% NTA CAGR creates proportionate FGX discounts when share prices are rising or flat.
If FGX outperforms when markets fall and, through a full cycle, delivers lower drawdowns with only slightly reduced returns than VAS you can expect it to trade much closer to NTA and even at small premiums.
