Global Investments

[weijian]

I think by just looking at income generated by GIL in one year is not looking at the big picture. After all, fund managers managing unit trusts always give you total return numbers (which include capital gain/losses) in the long term. Why you are looking at GIL on the "income lens" for one year only?

A more accurate picture would be looking at ROE numbers chart since 2009 presented on page 14 of their latest annual report. You can see that they had generated more than 10% ROE in some years previously. The NAV chart on the same page also shows you that they have grown their NAV from $119.4m in 2009 to $258.4m in 2023. Why since 2009 you might ask? Because that was the year when SICIM took over the management of the fund from Babcock & Brown.

Finally, do take note that asset allocation is never static. The fund is managed as an absolute return fund, with the aim of delivering regular dividends and capital growth consistently.

hi ghchua,

Fund managers like to present "total return numbers in the long run" because their main objective is to sell. What is more impressive to represent --> (A) 100% increase over last decade, or (B) 7% annualized return over last decade?

P.S. Both have similar returns

While historical performance plays a part, but more importantly is whether any good historical performance can be replicated into the future for prospective investors. Prospective investors can't earn historical returns for sure. From pg14, the mid teens ROE in the 1st few years after GFC2008 has reduced to mid single digit kind of ROE (FY17 been an anomaly). Should we still put weight on the double digit ROEs as you mentioned?

As for net asset value growth, I cannot deny that growth because it seems like a lot of capital has been retained via scrip I suppose? But it would be interesting to look at the net asset value per share, which is not shown. Sometimes, what is not shown, might actually be representative, isn't it?

[ghchua]

Hi weijian,

Just to clarify. On page 14, the chart below shows "Net Asset Value & Adjusted NAV Per Share Growth". So, it did show what you are looking for. Dividends is paid out of earnings, so even if they retain those dividends via scrip dividend, it is retention of profits, and not really capital as you have cited.

I think their recent year ROE numbers are affected by Covid 19 pandemic and also interest rate hikes. Though past performance is not a guarantee of future, what I am trying to show here is that GIL's performance is not really that bad if you look at their track record for the long term.

Do remember that if they perform better in future, we are not only looking at adjusted NAV per share growth but also the possibility of the share price trading at a lesser discount from its NAV. That itself will be a double upside that we are looking at.