Is This The Best Investment Business On The ASX?
About The Magellan Global Trust
Magellan Global Trust is an actively managed global shares investment trust, which is managed by Magellan Financial Group Ltd (ASX: MFG).
MGG, under the listed investment trust (LIT) structure, has recognised that many retail investors prefer to receive more in the way of regular dividends. It targets a 4% cash distribution yield, distributed bi-annually.
Magellan Global focuses on global shares unlike most listed investment companies (LICs) which essentially just invest in ASX shares. Australia only has roughly 2% of the world’s share market capitalisation, meaning that if you don’t invest globally you are potentially missing out on majority of the world’s opportunities.
One of the main things to consider with any investment is what its costs are, as this reduces the net returns. The annual management fee and administration fee of the is 1.35%. This is quite expensive compared to cheap exchange traded funds (ETFs). It also charges a performance fee of 10% of the outperformance compared to its benchmarks, in which case is the higher of the MSCI World Net Total Return Index (AUD) and the Absolute Return Hurdle (the yield of 10-year Australian Government Bonds).
High fees can be justified if a fund is outperforming, and the Magellan Global Trust has been doing just that.
Since inception (October 2017), the Magellan Global Trust has outperformed the MSCI World Net Total Return Index by 3.3% after fees per year (by returning 17% per year). Over the past year it has outperformed by 4.4% after fees, achieving a 12% return.
The Trust’s investment philosophy is to invest in a focused portfolio of 15-35 of the world’s best companies at a discount to intrinsic value.
As such, it has a high quality list of holdings which have excellent network effects and good growth runways like Facebook and Apple.
We learned this week that Magellan has taken up a large position in Chinese e-Commerce giant Alibaba. This is a very interesting move and it shows that Magellan is willing to invest anywhere in the world for returns. Investment flexibility is very useful.
Time To Buy Shares?
There are two factors to consider when assessing whether or not Magellan Global Trust is a good buy. You can compare the net asset value (NAV) per share against the share price to see if it’s cheap or expensive. In doing so, you would find that it’s currently at a 6% discount to the NAV.
You also need to think about whether or not the underlying holdings are good value as well. There’s no point buying something at a slight discount if the underlying holdings are really expensive. With this, it’s a lot harder to say if shares of Facebook, Apple etc. are good value or not themselves.
Want to know the name and ticker code of our #1 ASX ETF for 2019? Click here to access our free investing report, including the name, ticker code and a full analysis of our favourite ETF.
Legal disclaimer: Chances are, the information you read on the BESTETFS website may contain a mix of factual information and general financial advice. Any information/advice on this website is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information and NEVER INVEST IN AN ETF OR MANAGED FUND BEFORE READING THE PRODUCT DISCLOSURE STATEMENT (PDS). If you don't read the PDS you're practically flying blind with one arm tied behind your back. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: Jaz owns shares of Magellan Global Trust at the time of writing, but this could change at any time.
Check out our ETF Strategy + portfolio for ‘no fuss’ investing!