MENU

Why now could be the best time to buy Magellan Global Trust (ASX:MGG) shares

I believe that Magellan Global Trust (ASX: MGG) is a great semi-passive choice for all investors looking to increase their portfolio’s exposure to overseas earnings.

It’s a listed investment trust (LIT) that is run by Magellan Financial Group Ltd (ASX: MFG). The trust has a very similar strategy to the Magellan Global Fund, which has delivered a return after fees of better than 9% per annum since inception, over the past 10 years, 9 years and so on all the way to just the last year’s performance. The Magellan Global Fund has also outperformed the MSCI World Index on a three-year rolling monthly basis more than 90% of the time.

Past performance is not an indicator of future performance, however this consistency may prove somewhat of a guide for Magellan. The Magellan Global Trust has outperformed its benchmark since inception last year.

It’s always a good idea to buy into a high-performing fund, but I think there are three good reasons to do so sooner rather than later:

  • It’s trading at a discount to its net asset value (NAV). The share price is $1.66 whilst the intraday indicative NAV is $1.69. A 2% discount is nothing to shout about, but buying at a discount of a market-beating business is attractive.
  • FAANG falls are long-term opportunities. Facebook’s recent share price fall affected the trust’s value. At the end of FY18 Facebook was the biggest holding at 8.7%, therefore over the next year or two it could be the biggest contributor to the trust’s performance if Facebook proves the doubters wrong.
  • Australian election. Labor appear to be on course to win the upcoming election. One of the key pledges is to remove franking credit refunds. If the refund part of franking credits is indeed removed it could make REITs and global-focused funds more attractive to income investors. The closed-end structure of Magellan Global Trust means the share price could appreciate to a premium.

Foolish takeaway

Whilst the fees of Magellan Global Trust are fairly high, if it keeps outperforming the index after fees then it’s worth the expense. It also comes with an attractive 5% discount re-investment plan. I’m looking to slowly accumulate on market dips or when the discount widens.

Another business I’m looking to add more shares of in my portfolio is this hot ASX stock which is just starting to expand into Asia – a great growth region.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

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.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now