Why Magellan Global Trust (ASX:MGG) could be a good growth choice

Magellan Global Trust (ASX: MGG) released its monthly update to investors this afternoon.

This is a listed investment trust (LIT) run by Magellan Financial Group Ltd (ASX: MFG) that invests in global shares for shareholders.

I’m a firm believer that most Australian investors have far too little of their portfolio invested in overseas shares, so Magellan Global Trust could be a good way to get exposure.

It invests in what the investment team believe are the best businesses in the world. Its top 10 holdings (in alphabetical order) are Alphabet (Google), Apple, Facebook, HCA Healthcare, Kraft Heinz, Lowe’s, Mastercard, Starbucks, Visa and Wells Fargo. This is a high-quality list of holdings.

Although all these companies are listed in America, they are global businesses which means they generate revenue across the globe. It’s estimated that 46% of the holdings’ revenue comes from the US, 12% from Western Europe, 12% from emerging markets and 9% from the rest of the world.

Eagle-eyed readers may have spotted the above percentages don’t add up to 100%. That’s because Magellan Global Trust currently has 22% of its portfolio as cash (and rounding effects). This offers significant protection for investors if the market goes down, it also means it has a good war chest for opportunities if the market does crash.

Unlike the ASX which is concentrated on banks and resources, Magellan’s portfolio is diversified nicely. Around 16% is in consumer defensive shares, 1% mass market retail, 8% healthcare, 18% internet and eCommerce, 13% IT, 5% consumer discretionary, 9% payments, 5% financials and 3% infrastructure. The rest is in cash.

Magellan Global Trust aims to beat the MSCI World Net Total Return Index in Australian dollars. Since inception the index has returned 8.2% whilst Magellan Global Trust’s portfolio has returned 9.6% after all ongoing fees and expenses. This assumes the distributions are re-invested.

It aims to pay a cash distribution yield of 4% per annum and it also offers a distribution re-investment plan with a handy 5% discount to the net asset value per security.

Foolish takeaway

I hope that Magellan Global Trust will continue to outperform the index benchmark. It offers investors a good mix of potential income and capital growth. If any new large quality businesses come along, Magellan Global Trust has the flexibility to invest in them.

At the moment it has an estimated underlying value per share of $1.64 and the share price is $1.58, suggesting a small discount. Of course, Magellan does come with reasonably high fees, currency risk and a fair chance of underperformance.

If you want to stick to quality Aussie shares and want to avoid fees, you should consider these top shares.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!