Magellan FuturePay
A growing monthly income, now and into the future

How it works

Approach

FuturePay at work

FuturePay is an innovative, new, listed, actively-managed fund which aims to deliver investors: a predictable monthly income that grows with inflation, driven by returns and capital growth, with a focus on downside protection. This is underpinned by a reserving strategy and on-going income support, together with daily access to capital.

To underpin the objective of delivering investors a predictable monthly income that grows with inflation, FuturePay  will make contributions to the Support Trust, a separate pool of assets managed for the benefit of FuturePay  investors. Together with FuturePay , the Support Trust operates to provide a capital reserving and income support function. This is further supplemented by a MFG Reserve Facility. These provide FuturePay  with potential income support during poor market conditions.

Meet the manager: Paddy McCrudden, Portfolio Manager of FuturePay, explains how FuturePay was developed, what the benefits are and how it works in practice.  

(Viewing time 8 mins) 

‘We think that Magellan FuturePay really addresses an unmet need in the Australian retirement landscape.'

Paddy McCrudden
Head of Retirement Solutions and Data Science, read bio.
Investor experience

The FuturePay investor experience

What to expect when you invest.

The animation below provides an overview of your investment journey in FuturePay:

  • When you invest in FuturePay,
  • during your investment in FuturePay,
  • and if you chose to exit FuturePay.

Reserving in practice

Reserving in practice

While the intuition of putting something aside in good times for an inevitable 'rainy day' may not be new, it is a powerful and effective insight into how to manage risk.

Magellan FuturePay aims to grow investors’ capital in line with inflation, after deducting monthly income payments and fees. In any given month, if FuturePay’s investment portfolio outperforms this objective, FuturePay may reserve some portion of that outperformance in the Support Trust.

Conversely, where the investment performance of FuturePay has not kept up with this objective, investors in FuturePay may benefit from income support paid from the Support Trust*. These payments from the Support Trust are designed to reduce the need for FuturePay to sell its investments during poor market conditions – helping to protect FuturePay ’s capital base and improving the impact of compounding investment returns in the long term.

As part of building and maintaining reserves, FuturePay will make a small contribution from the capital it receives from new investors to the Support Trust.

This process of reserving capital for future income support has significant benefits for investors.

“Investing in FuturePay provides considerable uplifts on both income and accessible capital through retirement.”

Quote from Rice Warner, Review of Retirement Solutions, 5 May 2021 (Section 1.5, page 5 of 118)

This Report is an independent assessment focused on quantifying the outcomes for retirement investors using Magellan FuturePay as a component of their retirement strategies. The Report outlines the modelling assumptions and assessment framework used in their analysis.

Support Trust

About the Support Trust

The Support Trust’s objective is to assist FuturePay in delivering a predictable monthly income to investors over the long term.

The Support Trust is funded by investors in FuturePay and exists for the benefit of investors in FuturePay.

Amounts contributed to the Support Trust will be invested in defensive assets that have low correlation to the assets of FuturePay  (typically cash or cash equivalents).

Amounts contributed by FuturePay to the Support Trust are not paid to investors if they redeem out of FuturePay. This money remains pooled in the Support Trust for the benefit of all remaining investors, as it did when you were invested.  Like those before you, you leave the value of this benefit behind.  

By pooling your reserves with other investors – FuturePay aims to deliver a more efficient and optimal reserving process, maximising the benefits to you of reserving.

The Support Trust will be overseen by a Magellan trustee who will determine when payments should be made from the Support Trust to support the target monthly income paid to investors in FuturePay*. The framework on which the Trustee makes those decisions is set out in the PDS.

Further supplementary support is provided by a MFG Reserve Facility, which together with the Support Trust assist FuturePay  in delivering on its objectives.

Magellan partnership

In partnership with Magellan

On launch, Magellan Financial Group will provide its own capital to help kick start the Support Trust – so investors have the potential to benefit from income support from day one. 

Magellan Financial Group has committed to contribute up to $50 million of its own capital to FuturePay to assist with the initial capitalisation of the Support Trust. Magellan Financial Group’s contribution will be made incrementally, when there is a net issuance of units in FuturePay.  

Further, if the assets in the Support Trust are low, FuturePay can borrow additional funds from Magellan Financial Group to support FuturePay in paying the target monthly income to investors. The MFG Reserve Facility is sized at 2% of the value of FuturePay ’s investment portfolio (subject to a cap of $100 million).

FAQs

FAQs

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* There is no guarantee that the Support Trust will provide monthly income support or that the target monthly income will be met.