MENU

3 reasons why I own Magellan Global Trust shares

There are many listed investment companies on the ASX which focus on our large domestic businesses like Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS) and Wesfarmers Ltd (ASX: WES).

However, there are very few closed-end listed entities which purely focus on overseas investments.

Magellan Financial Group Ltd (ASX: MFG) has been running a very successful managed fund which has soundly beaten the market. In-fact, over the last five years the Magellan Global Fund has returned an average of 18.53% per annum after fees.

However, the unlisted fund isn’t a great source of income and it isn’t as easy to access as the new Magellan Global Trust (ASX: MGG). Here are three reasons why I thought the new trust was worth an investment:

Income yield

Australia is known for having very generous dividends, however it’s different overseas. Global companies listed in the USA re-invest a lot more of their profits.

Magellan management have decided to have a goal distribution yield of 4% of net tangible assets per unit over the long-term. This should provide investors with a good combination of income and growth.

Global superstars

The ASX may have a few top-quality stocks but most of them pale in comparison to the best companies in the world.

Apple, Alphabet, Ebay, Microsoft, Visa and others are truly global superstars that Australian investors are missing out on if they’re not directly or indirectly invested.

Magellan Global Trust gives investors that exposure and should also be able to move into other businesses when they come along.

Potentially safer?

A fair question might be to ask why not just invest in the unlisted fund?

The unlisted fund only has the flexibility of holding cash up to 20% of the portfolio. The trust actually has the ability to hold cash up to 50% of the portfolio. Therefore, theoretically it should do a better job of protecting an investor’s capital in a market crash.

Foolish takeaway

I think Magellan could provide investors with an impressive total shareholder return over the coming years, which is why I own shares in it.

If you want even more exciting growth ideas of the future, then you should check out these stocks.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We're living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That's why at The Motley Fool we've been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We've found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Tristan Harrison owns shares in Magellan Global Trust. The Motley Fool Australia owns shares of Telstra Limited and Wesfarmers 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 Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.