Future Generation Australia (FGX) Status update summary

Investment portfolio update

• Achieved strong returns with lower volatility than the market through diversified fund manager selection and a focus on small and medium-sized companies.

• Maintained a steady stream of fully franked dividends, with yields over 7.5% for Australia and over 9% for Global, supported by strong profit reserves.

• Saved AUD 175 million in fees, enabling AUD 100 million in donations to youth-focused causes while benefiting shareholders through retained savings.

• Portfolio managers are underweight large tech and AI-related companies due to high valuations, focusing instead on second-derivative opportunities like data centers and power transmission.

Productivity and economic outlook

• Productivity growth in Australia has stagnated since 2018, resulting in flat living standards and real incomes.

• Comprehensive tax reform, investment in skills, and reducing energy costs are seen as critical levers to revive productivity.

• Current policy focus is more on redistribution than growth, risking future living standards for the next generation.

• AI and technology could boost productivity, but require regulatory balance and equitable access to skills, especially for SMEs.

Policy and budget commentary

• Recent tax changes on negative gearing and capital gains for residential property are supported, but extending capital gains tax to non-residential assets is seen as detrimental to investment.

• Housing supply remains a key issue, with calls for innovation in construction and planning, and leveraging AI to streamline approvals.

• Budget growth projections are modest, raising concerns about whether current measures will drive sufficient economic dynamism.