It aims to give investors exposure to some of the best internationally-listed shares that it deems are high quality. It just revealed its performance in August 2018, showing that the fund delivered a 5.4% growth performance after fees, outperforming the MSCI World Net Total Return (AUD) by 1.3%.
Since inception in October 2017, Magellan Global Trust’s portfolio has returned 19.8% after fees, outperforming its benchmark by 1.7%. It has managed this by investing in quality growth shares like Alphabet (Google) and Facebook, whilst also investing in quality defensive shares such as HCA Healthcare and Kraft Heinz. It also keeps a healthy amount of cash on hand, at the end of August 20% of the portfolio was cash.
Whilst the portfolio seems to be US-focused, the underlying source of revenue is global with less than half of the portfolio’s underlying revenue coming from the US.
It does come with a fairly expensive 1.35% per annum management fee, but if it outperforms the benchmark after all fees then it’s clearly worth the fee.
I like Magellan Global Trust because its holdings are growth-focused enough to outperform the benchmark over the long-term. Yet, the cash and defensive holdings means it’s defensive enough to be less volatile than the benchmark too. It’s true that if it were fully invested it could produce even stronger returns through the cycle, but its composition allows for outperformance in bull or bear conditions.
Magellan Global Trust is trading at a slight discount to its underlying value. If your portfolio has little overseas exposure then I think this could be a really good way to get that exposure.
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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.