Magellan Global Trust (ASX: MGG) is a closed-end, actively managed trust that invests in global shares.
I’m a big believer in that Aussie investors need to add to their diversification by holding more global shares. Magellan Global Trust could be a good way to fix this problem and let a high-performing fund manager do the investing for you.
The trust has only been operating since October 2017 but it has already created a strong performance.
It has a management fee of 1.35% and a 10% of outperformance fee, yet Magellan Global Trust has outperformed the MSCI World Net Total Return. The index has returned 10.8% and Magellan Global Trust’s portfolio has returned 11.4% including all fees since inception.
Magellan Global Trust only invests in what it calls the highest quality shares around the world.
Its top holdings are Facebook (8.7%), Alphabet (7.2%), Lowe’s (5.5%), Kraft Heinz (5.3%), HCA Healthcare (5.2%), Apple (5.2%), Visa (4.9%), Wells Fargo (4.8%), Starbucks (4.2%) and MasterCard (4.2%).
This is a quality list and I can imagine that this group will lead to continued outperformance.
This trust looks to manage risk versus opportunity by keeping a good amount of cash on hand, at least in this environment of trade wars and rising interest rates.
The cash provides safety in market downturns and also will mean it has ample ammo to buy beaten-down shares at good prices if that happens. At the end of June 2018 it had 21% of its portfolio as cash.
Magellan Global Trust is targeting a cash distribution yield of 4% per annum, paid semi-annually.
If investors decide to re-invest the distribution then a 5% discount to the net asset value per unit is applied. The discount is paid by Magellan Financial Group Ltd (ASX: MFG).
It’s currently trading at $1.59 with an estimated NAV of $1.65, which means it’s trading at an estimated discount of around 3.8%. I’d be happy to buy some Magellan Global Trust shares today and buy more each time there’s a global share market decline.
Want to stick to owning quality individual shares but want international diversification? This top Aussie business is just starting to expand into Asia.
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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.