Effective 1 November 2019, the Investment Management Agreement is for three years on the same terms as the previous agreement but with a lower annual management fee of 0.75% that will be charged on the Company’s market capitalisation. This is a significant reduction in the previous management fee of 1.0% of net tangible assets (NTA).

Commenting on the new fee structure, TGG Non-Executive Chairman, Mr Chris Freeman, said: “This makes TGG one of the lowest, if not the lowest, cost global equity LICs in Australia. By aligning the management fee with market capitalisation, rather than the net asset value of the portfolio, the Board believes shareholder interests will be better served. We believe this is a forward-thinking approach, and one which has been the preferred approach in other larger and successful LIC markets, such as the UK.”

To further align the investment manager with shareholder interests, FTIAL will now be paid a capped performance fee of 20% of outperformance against the MSCI World All Countries (net dividends) Index after allowing for investment management fees. This performance fee will be based on a three-year rolling period but will not commence until year three of the Investment Management Agreement. The total fees will also be capped at a maximum of 2% of net asset value.

The changes come off the back of the TGG Board engaging an independent asset consultant to analyse TGG against other peer LICs in terms of investment philosophy, performance and fees.

Based on the review and feedback from shareholders, the TGG Board considered that most shareholders have invested to access the Templeton Global Equity (TGEG) group’s long-term value-based investment philosophy and remaining with that philosophy and investment approach would continue to best serve shareholders’ interests.

Further to this, recently appointed Executive Vice President of TGEG, Peter Sartori, will be assuming lead portfolio management responsibilities for TGG from 2 December 2019, supported by TGEG team members, Alan Chua, Portfolio Manager, and Paul De Josselin, Research Head for Asia. Mr Sartori and Mr Chua each have 29 years’ global industry experience and Mr De Josselin has more than 22 years’ industry experience.

Mr Freeman said, “While TGG remains true to Templeton’s original investment principles and fundamental value-oriented investment philosophy, these changes allow TGG to take advantage of new investment management talent, broaden its research coverage, and enhance its technology and portfolio risk modelling.”

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Results as at 30 June 2017 included:

• Increase in NTA per share to 148 cents
• 4.5 cents per share fully franked final dividend
• Net profit after tax of approximately $3.65m
• 23.3% investment portfolio performance for the year to 30 June
• Improved shareholder returns

TGG Non-Executive Chairman, Chris Freeman, said: “The Board is extremely pleased that we are achieving improved returns for our shareholders, with a significant narrowing in the discount to NTA over the financial year. NTA at 30 June 2017 was 148 cents, up from 128 cents for the previous year.

“We are delivering to shareholders a 4.5 cent per share final dividend, which will be fully franked and will also contain LIC Capital Gains attributable to 4.5 cents per share. This exceeds our dividend target of 3.8 cents per share we set last year.

“Net profit after tax for the financial year ended 30 June 2017 was $3,658,002, marginally below $3,775,042 in 2016. This is primarily due to the impact of the on-market share buyback.

“Overall, we are very happy with these results. Over the past 12 months, we have successfully executed on our strategy, which has included more engagement with the market and a share buyback program. Today’s announcement is evidence we are succeeding in building greater investor confidence and interest in TGG.”

Continuing strong investment portfolio performance

TGG’s underlying portfolio, managed by the Templeton Global Equity Group, performed very strongly, delivering a gross return of 23.3% for the financial year, compared to the MSCI AC World index benchmark of 15.3%.

“The portfolio’s solid performance this financial year has been achieved against the backdrop of what is still quite a volatile investment environment”, added Mr Freeman. “Our expectation is that with a rise in bond yields to more normal levels, the re-emergence of inflation and improving economic growth, equity markets are likely to return to conditions which are supportive of our value style of investing. We are seeing pockets of opportunity in certain markets and sectors across the globe and believe this is an environment where value discipline and active risk management will be rewarded over the longer term.”

TGG this year celebrated 30 years as a LIC and is one of the oldest LICs in the global equities sector.

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