Magellan Financial Group Ltd (ASX: MFG) today announced the initial public offering (IPO) of the Magellan High Conviction Trust.
It’s a fund/trust which aims to invest in the best 8-to-12 best stock ideas from the Magellan investment team. In its ASX update today, Magellan said the unlisted version of the trust had returned 16.6% per year net of fees since it started in July 2013.
Investors in Magellan can apply for up to $50,000 in the new trust and may receive a loyalty reward of additional units worth 7.5% of their allotment. General public applications will receive additional units worth 2.5% of the value allotted to them.
Magellan will pay for these one-off costs, but it isn’t appointing a broker syndicate and is not paying any fees or commissions to brokers or advisers to handle the raising.
CIO and co-founder Hamish Douglass said he would be taking up his priority offer and also subscribe for $20 million under the wholesale offer. To fund these new costs, Magellan (the company) will be raising $275 million from institutional investors by selling new shares in the company at $55.20.
The high-conviction trust will target a 3% distribution/dividend yield but it will have an annual management fee of 1.5% per year plus a performance fee of 10% over a single hurdle of 10% per year total return after management fees.
That’s quite a high fee which will eat into investors’ returns from the trust. Still, Magellan is a very popular fund manager right now.
To see the full list of ASX-listed ETFs and Exchange-Traded Managed Funds (ETMF) click here.
How do you value an investment?
You should know, we’ve just asked our top analyst to put together a FREE valuation course and make them available to investors like you, for a limited time.
Complete with downloadable Excel models, templates and valuation tools, simply click here to access the course.
It’s completely free!
Disclaimer: Any information contained in this article is limited to general financial advice/information only. The information should not be relied upon because it has not taken into account your specific needs, goals or objectives. Please, consult a licenced and trusted financial adviser before acting on the information. Past performance is no guarantee of future performance. Nothing in this article should be considered a guarantee. Investing is risky and can result in capital loss. By reading this website, you acknowledge this warning and agree to our terms & conditions available here. This article is authorised by Owen Raszkiewicz of The Rask Group Pty Ltd.