Shares of MFF Capital Investments Ltd (ASX: MFF) have just this week reached a new all-time high of $3.24 and are today consolidating around the $3.15 level. Given MFF shares started the year at $2.56, the company is looking at a YTD gain of 25%. So, what has lit this listed investment company (LIC) on fire? Let's take a look.
Who is MFF Capital?
MFF is an LIC closely associated to the Magellan Financial Group (ASX: MFG), having being launched by one of Magellan's co-founders, Chris Mackay. Although it's now run independently from Magellan's other investment funds, the two companies still maintain an association and fee arrangement.
MFF focuses on investing in quality companies on both the ASX and US stock markets (although currently, MFF's portfolio is only in US stocks). Because the company has a long-term focused investing style, MFF's portfolio turnover is very low, with the company preferring to buy into high performing companies and hold them unless fundamentals change. As such, the company's investments have not varied drastically over the past year, meaning that MFF incurs very low turnover costs and taxes.
Why has the MFF share price hit the roof this year?
It's a combination of the performance of MFF's underlying investments and a falling Australian dollar. Because MFF holds US companies, if the Aussie dollar falls against the greenback (like it has throughout this year), the value of MFF's portfolio rises in AUD terms.
Some of MFF's top holdings include payment giants' Visa and Mastercard (together making up over 30% of the portfolio), as well as Bank of America, Alphabet, Microsoft and the Coca-Cola Company. All of these businesses are among the best that the US offers, and most have experienced large share price rises. Mastercard shares alone are up over 40% for the year.
Foolish takeaway
I think MFF is a high-quality investment, and one worth considering for any investor – especially those looking for some easy access to the best companies on the US market. Its management fee is lower than other LICs out there (especially Magellan's other offerings) as well. Although I don't like loading up when share prices are near all-time highs, I will certainly be adding to my pile if MFF experiences any dips in the future.
