The Magellan Global Trust (ASX: MGG) may not stand out as the first place to invest when looking to acquire a unique selection of the world’s most recognised brands.
MGG is a Listed Investment Trust (LIT) established under the management of Magellan Asset Management — part of Magellan Financial Group Ltd (ASX: MFG).
MGG commenced trading in October 2017 after initially raising equity through an IPO at $1.50 per unit. MGG aims to invest in 15-35 high-quality global stocks which as at 30 June 2019 included MasterCard, Visa, Apple, Microsoft, Kraft Heinz, and Oracle to name a few.
Having individual holdings in these highly credible companies would be most welcomed in most investors portfolios, however, it’s not necessarily the most cost-effective option. That being said perhaps purchasing MGG could be the next best thing for your portfolio.
Attractive Discounts
Aside from the unique portfolio of holdings, MGG offers an attractive distribution reinvestment plan offering shareholders the opportunity to re-invest at a 5% discount along with no brokerage costs. They also offer a cash distribution yield of 4% and have paid half-yearly dividends since inception. Earlier this year in March 2019, MGG presented an opportunity to participate in a Unit Purchase Plan where eligible unit-holders had the option to purchase up to $15,000 of new fully paid units at a 5% discount. Under the plan, units were being purchased at ~$1.53 with today’s prices being $1.88 as at 19 July 2019.
In addition to this, I like the fact that MGG offers investors overseas exposure and diversification across sectors such as Internet & eCommerce, Payments, Health Care, Information Technology, and other consumer-based businesses. MGG maintains 12% of the portfolio in cash allowing the fund to take advantage of markets when shares are trading at a discount. This is a great strategy to have especially with markets currently being so volatile.
Value For The Long Term?
I like the approach that MGG has taken to invest in global businesses giving investors exposure to options outside of the Australian share market (ASX). MGG manage the currency exposure which is another added benefit to investing globally — and one less thing for the MGG’s investors to be concerned about. Since inception, MGG has made returns of 16.2% per year. Naturally, I am happy to have it as part of my portfolio.
I would encourage anyone to take a look at each of the companies that make up this portfolio and you will see the strong focus they have with regard to innovation, which I believe promotes continual growth. I look at MGG as a compact package of exciting growth and value companies that will keep me interested for some time to come.
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Disclosure: At the time of writing, Robert owns units in Magellan Global Trust (ASX: MGG)