Until now, Magellan Financial Group Ltd (ASX: MFG) was mostly known for its suite of listed managed funds. Or Listed Investment Trusts (LITs) if you want to get technical.
Over the past decade or so, these funds have become some of the most popular managed investments on the ASX.
Take the Magellan Global Fund (ASX: MGF). It's a globally focused fund that holds companies such as Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) and Netflix Inc (NASDAQ: NFLX).
It targets both capital preservation and strong compounding returns. As of 30 April, it was worth a staggering $3.18 billion.
Historically, Magellan has been famous for this kind of fund. As far back as 2019, Magellan was flagging a retirement-focused product for its massive base of retail investors.
Until today, it had been very coy on what exactly this might be, only ruling out that it would be an annuity-style product.
But that could be about to change after Magellan finally revealed some details about its new retirement-focused product. An ASX release this morning sheds some light on this new offering.
A retirement fund?
According to the release, the new product will be known as 'FuturePay'.
Magellan didn't offer too much detail, instead spruiking that more information will be available at the product's official launch on 1 June.
But here's what Magellan CEO Brett Cains did say about the "upcoming retirement income-focused solution":
We are pleased to announce the launch of Magellan FuturePay. We believe it will help address the challenges faced by many investors and their advisers, particularly those dealing with the problem of establishing a retirement income.
This is an important topic and I look forward to discussing our approach in further detail at our upcoming launch event.
However, a report in the Australian Financial Review (AFR) this morning has some more details.
The AFR says the fund will target an initial yield of 4.3% per annum. This will be paid monthly to investors, which Magellan aims to adjust for inflation and grow over time.
Like most of Magellan's other funds, FuturePay will focus mostly on global equities. It will be able to divert profits in times of outperformance into a trust.
The fund will also reportedly be backed up with capital, and a loan facility capped at 2% of the fund's value, from Magellan's own balance sheet.
This structure will allow Magellan to smooth out its distribution payments over time, balancing out market gyrations.
It's also estimated the new FuturePay fund will list on Wednesday 2 June, just after the official launch. It will reportedly list on the Chi-X exchange under the ticker code 'FPAY'.
The fund will charge a management fee of 1% per annum.
About the Magellan share price
The Magellan share price has risen slightly on the back of this news.
Magellan Financial Group shares are up 0.48% at the time of writing, to $47.74. That's largely in line with the S&P/ASX 200 Index (ASX: XJO).
This share price gives Magellan a market capitalisation of $8.74 billion, a price-to-earnings (P/E) ratio of 21.56 and a trailing dividend yield of 4.61%.
