The Motley Fool

The VGI Partners share price has tripled since June

Early stage investors in VGI Partners Ltd (ASX: VGI) will be chuffed this October with the stock tripling since it handed out 13.6 million new shares at $5.50 each during a June 2019 IPO.

The IPO investors were a select group of prior investors, friends, and high roller associates who’ve all watched the value of their equity rocket thanks in part to the complex structure of the IPO pricing. 

Today VGI reported funds under management (FUM) has gone nowhere over the quarter to September  30 2019 to remain flat at $2.6 billion.

However, this number does not include the more than $500 million raised as part of its VGI Partners Asian Investments Fund that offered existing investors in other VGI funds free ‘bonus’ or ‘alignment’ shares in return for investing. 

In this sense VGI has taken a leaf out the Magellan Financial Group Ltd (ASX: MFG) play book by incentivising retail investors to tip in more FUM as asset management is a scalable business that boasts excellent operating leverage. 

VGI has also followed Magellan in launching exchange traded actively managed funds, with VG1 Partners Global Investments Ltd (ASX: VG1) and its soon to be launched Asian fund. 

For now though it appears VGI is largely just targeting retail and high-net-worth investors partly because it does not yet have any institutional business development, or potentially has no intention to win institutional mandates. 

Personally, I wouldn’t invest in a fund manager that doesn’t target institutional mandates or outsources institutional business development and retail distribution functions.

That’s not to say you cannot make money investing in VGI, as the huge returns for early investors show. 

For many reasons outlined previously the only two asset managers on the local market I’d consider investment grade for now are Magellan and Macquarie Group Ltd (ASX: MQG).

NEW! Top 3 Dividend Bets for 2019

With interest rates likely to stay at rock bottom for months (or YEARS) to come, income-minded investors have nowhere to turn... except dividend shares. That’s why The Motley Fool’s top analysts have just prepared a brand-new report, laying out their top 3 dividend bets for 2019.

Hint: These are 3 shares you’ve probably never come across before.

They’re not the banks. Not Woolies or Wesfarmers or any of the “usual suspects.”

We think these 3 shares offer solid growth prospects over the next 12 months. Each of these three companies boasts fully franked yields and could be a great fit for your diversified portfolio. You’ll discover all three names and codes in "The Motley Fool’s Top 3 Dividend Shares for 2019."

Even better, your copy is free when you click the link below. Fair warning: This report is brand new and may not be available forever. Click the link below to be among the first investors to get access to this timely, important new research!

The names of these top 3 dividend bets are all included. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.

Click here to claim your free copy right now!

Motley Fool contributor Tom Richardson owns shares of Macquarie Group Limited and Magellan Financial Group.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!