Magellan Asset Management has launched a listed investment company (LIC) offering individuals the chance to invest in a focused portfolio of international equities.
Called the Magellan Global Trust, the offering is looking to invest in global shares deemed to be trading at a discount as determined by the manager’s assessment of intrinsic value. It is aiming to deliver investors a cash distribution yield of 4 per cent annually.
The LIC’s portfolio will only be comprised of what Magellan describes as “outstanding companies”, which are those that are sustainably able to exploit competitive advantages in order to earn returns on capital that exceed their cost of capital.
The portfolio will contain anywhere between 15 and 35 stocks, with the manager having the ability to hold up to 50 per cent of the portfolio in cash and cash equivalents. In addition, foreign currency exposure arising from participation in offshore markets will be actively managed.
The LIC has included environmental, social and governance concerns and will not invest in companies generating the majority of its revenues from oil and gas production, tobacco or the mining of natural resources.
Magellan has targeted a minimum capital raising of $250 million from the LIC, with an offer price on units of $1.50 with a minimum bid of $2250. No maximum capital raising limit has been set. Magellan Financial Group will be settling all of the costs of the offer in cash. The price of units will be equal to the pro forma net asset value per unit after completion of the offer.
Investors will also have the opportunity to participate in a distribution reinvestment plan with a 5 per cent discount to be paid in full by Magellan.
“If you’re an investor in any form of equities, you really need to take a medium-term outlook,” Magellan Asset Management chief executive Hamish Douglass said.
“We really believe if you take a medium-term outlook and you’re investing in a global portfolio of some of the best companies, and they’re bought at attractive prices, that over time you’re going to get pretty good outcomes in terms of investment returns.”