Could you guys potentially see a scenario where WGB may reduce their 1.3% management fee to make this vehicle more attractive and narrow the NTA discount? It's currently sitting 2c above it's 2018 IPO price which is pretty amazing when you think of what's happened in US markets since that time. I actually don't mind the underperformance being due to an underexposure to the MAG 7 as I reckon this could act as a bit of a hedge against a bit of mean reversion happening with the very high valuations of those companies but even looking at the latest FY24 annual report WGB had quite a good year with a 35c increase in the pre tax NTA but this was off set by 2.9c in management fees which is the equivalent of losing 17% of our return for FY24.
If we applied this same rule of thumb and reduced the long term average performance of the fund (which is a respectable 9.7% pre fees and dividends) we'd be at a post fee return of 8% since inception.
I reckon this float got away right at the tail end of the spotlight coming on LIC fees and couldn't see one of a similar size getting up today with this fee structure.
One positive factor is there will be no performance fees due for a long time from here as they have to make up all of the cumulative underperformance first.
WGB Price at posting:
$2.22 Sentiment: Hold Disclosure: Held
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