To achieve attractive risk-adjusted returns over the medium to long-term through investment in a concentrated portfolio (8-12 securities) of high-quality companies.
10.0% of the excess return of the Trust above the Absolute Return Performance Hurdle (10% per annum). Additionally, the performance fees are subject to a high water mark.
All fees are inclusive of the estimated net effect of GST.
The iNAV reflects the estimated NAV per Unit updated for foreign exchange movements in the Fund's portfolio stocks by individual stock domicile and is also updated in respect of stocks that have live market prices during the ASX Trading Day. If there are no stocks held by the Fund that have live market prices during the ASX Trading Day, movements in the iNAV will only reflect foreign exchange movements. The iNAV will not be updated for market-based movements such as movements in stock market indices.
iNAV calculations as shown on www.magellangroup.com.au (the "data") provided by ICE Data Indices, see ICE Terms of Use, and is updated during ASX trading hours. Powered by Factset. iNAV is indicative and for reference purposes only. The Fund is not sponsored, endorsed, sold or marketed by ICE Data Indices, LLC, its affiliates ("ICE Data") and ICE Data or its respective third party suppliers MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE iNAV, IOPV, FUND OR ANY FUND DATA INCLUDED THEREIN. IN NO EVENT SHALL ICE DATA HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, DIRECT, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. You acknowledge that the data is provided for information only and should not be relied upon for any purpose.
** As at 30 September 2020.
Investment philosophy
The Magellan High Conviction Trust seeks to invest in outstanding companies at attractive prices, while exercising a deep understanding of the macroeconomic environment to manage investment risk.
Magellan perceives outstanding companies to be those that are able to sustainably exploit competitive advantages in order to continually earn returns on capital that are materially in excess of their cost of capital.
While Magellan is extremely focused on fundamental business value, it is not a typical 'value' investor. The Magellan High Conviction Trust will invest in companies that have relatively high price-to-earnings and price-to-book multiples, provided that their businesses are outstanding and their shares are trading at an appropriate discount to their assessed intrinsic value. Equities that appear undervalued on the basis of a low price-to-earnings or price-to-book multiples will often prove to be poor investments if the underlying business is fundamentally weak and exhibits poor returns on capital.
Magellan focuses on risk-adjusted returns, rather than benchmark-relative returns. As a result, the Magellan High Conviction Trust investment process is designed to generate an unconstrained, highly-concentrated portfolio of high-quality companies.
The Magellan High Conviction Trust will comprise of 8 to 12 investments, with the portfolio weighted towards Magellan's highest-conviction ideas. The Fund may also hedge some, or all, of the capital component of its foreign currency exposure arising from investments in overseas markets back to Australian dollars.
Portfolio construction
The Magellan High Conviction Trust's investment process integrates three key disciplines:
Intensive bottom-up stock analysis and industry research.
Broad and detailed macroeconomic insight.
Rigorous portfolio construction and risk discipline.
Intensive bottom-up stock analysis and industry research is undertaken in order to identify outstanding companies. This involves the assessment of potential investments against key quality criteria, as well as assessments of their intrinsic value. Magellan uses a proprietary ranking tool, the Magellan Conviction Scoring Matrix, to rank these companies based on these factors. This process enables the portfolio to be weighted towards higher conviction ideas (on a risk-adjusted basis).
Magellan's detailed macroeconomic analysis is overlayed during portfolio construction, alongside the application of both fixed and dynamic risk limits. This process ensures that the portfolio is not overly exposed to aggregation risk (risk which arises from correlated portfolio positions) or macroeconomic event risk. Macroeconomic event risk can be a significant source of negative returns for investors. Magellan will make significant changes to the portfolio if it believes that macroeconomic events could lead to significant and sustained loss in value for investors. Such events would include a financial crisis, a sustained oil price shock, a global pandemic or a major global conflict.
Calculations are based on the monthly ASX released net asset value with distributions reinvested, after ongoing fees and expenses but excluding individual tax, member fees and entry fees (if applicable). Fund Inception 11 October 2019.
The case for global investing rests largely on the belief that companies based outside Australia are expected to benefit the most from the key long-term shifts taking place all over the world.
Magellan intends to target a cash distribution yield of 3% per annum based on the average month-end NAV per Unit over a two-year rolling period (“Target Cash Distribution”).
Magellan will announce Magellan High Conviction Trust’s Target Cash Distribution per Unit on ASX at the beginning of each semi-annual distribution period. Magellan expects that the distribution policy will provide unitholders with greater certainty about the value of upcoming distributions.
Under the AMIT rules, investors will be assessed for tax on the income of the Trust attributed to them. Where the income of the Trust exceeds the Target Cash Distribution, the Constitution permits Magellan to reinvest part or all of the distribution and/or accumulate part or all of the Trust's income in the Trust, in which case the income of the Trust that is attributed to you (and which must be included in your income tax return) will be more than the cash distribution paid. Distributions will be paid semi-annually.
Yes, in respect of each Target Cash Distribution, Magellan may offer a DRP at its discretion. Magellan intends to offer Unitholders who elect to participate in the DRP in respect of the Target Cash Distribution an issue price which is set at a 5% discount to the prevailing NAV per Unit. As an additional benefit to Unitholders and to ensure that Unitholders who elect not to participate in the DRP suffer no dilution as a result of the DRP discount, the Magellan Group will pay Magellan High Conviction Trust an amount of consideration equal to the cost of this discount.
To elect to participate in the DRP, please contact the unit registry Boardroom on 1300 737 760 or log on to their secure website at www.investorserve.com.au
The Magellan High Conviction Trust is listed on ASX, however is a closed-ended listed investment trust, not an Active ETF.
Important Information: Units in the Magellan High Conviction Trust (Fund) are issued by Magellan Asset Management Limited (ABN 31 120 593 946, AFS Licence No 304 301). Past performance is not necessarily indicative of future results and no person guarantees the future performance of the Fund, the amount or timing of any return from it, or that it will achieve its investment objective. This material has been provided for general information purposes and must not be construed as investment advice. This material has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Investors should consider obtaining professional investment advice tailored to their specific circumstances and should read the relevant Product Disclosure Statement (PDS) prior to making any investment decisions. The PDS is available at www.magellangroup.com.au or can be obtained by calling 02 9235 4888.
Unit Registry Enquiries
Magellan High Conviction Trust
Magellan has appointed Boardroom Pty Limited to provide unit registry services for the Magellan High Conviction Trust. To manage your unitholding including:
Change your contact details
Update your bank details
Change your DRP election
Please visit Boardroom at www.boardroomlimited.com.au using your InvestorServe login or use the contact details provided.
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