Future Fund Watch

[demoniac 1,337]

If I recall correctly did not Jeffrey Gibb Kennett once aspire to Dee's presidency.... just sayin!

[La Dee-vina Comedia 17,053]

15 hours ago, Hawk the Demon said:

If you have known for twelve months that you will have $24 million in the bank by early November and that you are going to establish a Future Fund with it, why is it that your investment strategy will be completed by mid-2023, and you first full year earnings will come only in 2024?

 

Shouldn't that all have been sorted and the funds so deployed in November?

If we were still in an economy where interest rates were not moving upwards, you might be right. But any fund manager would have known over the last 12 months that the only way interest rates were going to move was upwards. Hence, waiting has a low risk. If we'd moved too soon, we might have invested in less than optimal opportunities. I'm not a finance person, but I can see that what you are thinking of as a delay I could see as maximising a strategic opportunity.

 

[Harvey Wallbanger 1,311]

1 hour ago, La Dee-vina Comedia said:

If we were still in an economy where interest rates were not moving upwards, you might be right. But any fund manager would have known over the last 12 months that the only way interest rates were going to move was upwards. Hence, waiting has a low risk. If we'd moved too soon, we might have invested in less than optimal opportunities. I'm not a finance person, but I can see that what you are thinking of as a delay I could see as maximising a strategic opportunity.

 

Could be. If you're right, the plan is in place, and the plan was to wait? The Financial Report words were '......the implementation of the Future Fund investment strategy will be completed by mid-2023.....'

Would be great to have more insight from the Club - it's pretty much our only asset (other than our great list of course).

[La Dee-vina Comedia 17,053]

20 minutes ago, Hawk the Demon said:

Could be. If you're right, the plan is in place, and the plan was to wait? The Financial Report words were '......the implementation of the Future Fund investment strategy will be completed by mid-2023.....'

Would be great to have more insight from the Club - it's pretty much our only asset (other than our great list of course).

And our loyal members who pay membership fees every year (and our sponsors, but I accept that our club's relationship with them is never anything more than temporary).

[Demon17 5,227]

On 2/27/2023 at 4:45 PM, Hawk the Demon said:

I am looking for help from financially astute Demonlanders.

Pretty much our entire asset base is now represented by our new Future Fund.

At the AGM, the CEO reported that our Future Fund would start off with $23.7 million.

Extracts from our Financial Report are oultlined below:

As outlined previously, the sale of Bentleigh Club settled just after the financial year end.

The Board have established a Future Fund with the proceeds of the sale, with the purpose of the Future Fund to underpin the long-term financial sustainability of the Club.

The Future Fund will achieve this by:

• Preserving and growing the capital base of the Club. A significant capital base is an important protection mechanism for the Club if there are any unexpected shocks to the football industry or Club environment in the future;

• Providing an annual income stream that supports the football activities of the Club. This will replace, and is planned to exceed, the previous gaming income of the Club.

It is important to note that it is not intended that the Future Fund be utilised for the following activities:

• Investment into Club Capital Expenditure projects, including but not limited to Training & Administration Facilities;

• Funding the day-to-day operating activities of the Club, including but not limited to Football Operations costs;

• Repaying debt incurred as a result of operating losses of the Club, or the activities outlined above.

The Future Fund will be overseen by the Club’s Investment Committee. The Investment Committee is comprised of representatives of the Board, Executive and independent members with significant experience in financial markets and investment activities.

The Board has appointed Morgan Stanley as Fund Manager for the Future Fund.

It is expected that the implementation of the Future Fund investment strategy will be completed by mid-2023, with the first full year earnings from the Fund expected in 2024.

Questions:

1. Why did we choose Morgan Stanley and what is their mandate?

2. What about the other $10 million in cash we had at 31 Oct 2022 - why is it, or a part of it, not also in the Future Fund? (We sold Leighoak for $10.7 million)

3. Given we have known for 12 months that the Bentleigh proceeds were coming in early November 2022, why will we only have our investment strategy completed by mid -2023?

4. Given the list of things the Future Fund is not for, I was interested to hear the CEO say that we may also use the Future Fund 'to take advantage of any strategic opportunities that arise'. He then said don't ask me what they might be....

 

You seem to have found a new Board whipping boy topic now the election is over. Please give it a rest on this site.

But in the spirit of being positive I'll answer one of your queries just to help.

Q.2:  A response likely would include that the FF is what it says, that is to future-proof the club ( a term used by the Board now).  A sound inverstment sttategy will lock away long term much of the funds in well performing financial assets. e.g you get a better Term Deposit rate for 4 years instead of 6 months is a simple way to put it.  The $10M cash if ring-fenced would be identified as working capital to run the club by Pert and the Board.  Maybe for home base design development which would require substantial cash.  The Board should not ever dip into the fund for capital works, non revenue-generating work. 

Norway adopted a similar model by investing all their profits from North Sea Gas into their own sovereign wealth fund.  They now own around 1% of every listed company on the planet, or thereabouts.  The income stream pays for their lifestyle, but capital remains locked away.

[Harvey Wallbanger 1,311]

Thanks Demon 17. Yes, I noticed preservation of the capital base as being key, so I was interested to see that a new line appeared re the Future Fund objectives at the AGM, when the CEO said something like "allowing the Club to take advantage of any strategic opportunities that arise" - and then said "don't ask me what they are".

In my experience strategic investments are the ones to be wary of....

[FireInTheBennelly 4,102]

18 hours ago, Queanbeyan Demon said:

1. Apparently Morgan Stanly showed excellent promise in the U19s, then did a groin and missed the entire next season. Comes off half back quite nicely. Mandate is to restrict oppo's half forwards
2. The 10M in cash is for 1) the umpies when we play Jeelong/South/Footscray during the finals and 2) ward off Bartlett
3. I hear from an insider that the Club is considering investing in tennis balls - very high rates of return
4. Strategic opportunity = buying all the The Filth's reserved seating at Headquarters for the next 10 years so we don't have to get fumigated upon leaving the ground. 

 

Sounds like Morgan Stanley's another Jason Taylor special to me

[daisycutter 29,894]

1 hour ago, Hawk the Demon said:

Could be. If you're right, the plan is in place, and the plan was to wait? The Financial Report words were '......the implementation of the Future Fund investment strategy will be completed by mid-2023.....'

Would be great to have more insight from the Club - it's pretty much our only asset (other than our great list of course).

and demonland of course

[Harvey Wallbanger 1,311]

44 minutes ago, daisycutter said:

and demonland of course

Of course!

[manny100 1,621]

Markets have been down so its a good time for experts to invest the money. Over time this should grow significantly.