Why Global?

Investing in a Magellan fund starts with the question 'why invest in global equities?'.

Glossary

Why global investing?

Consider tying your financial fate to the world’s best companies.

Australians have heavily tied their financial fates to Australian equities. Australian stocks have certainly proved to be good investments over the past two decades. The industrialisation of China boosted commodity prices, which has helped Australia’s economy expand continuously since the early 1990s. Our banks and mining stocks, in particular, thrived.

But is that the future? China’s rise shows no sign of stopping but its leaps are likely to be centred on services and not the manufacturing that needs our commodities. As they become wealthier, emerging-market consumers are buying global brands. Amazon.com and other internet-based companies are shaking up traditional retailing. Social media is expanding. The Google and Apple consumer digital platforms will become more entrenched. 3D printing, robots, driverless cars and other forms of artificial intelligence are taking hold. Concerns about climate change are prompting a shift to a low-carbon world.

The case for investing in global equities rests largely on the premise that companies based outside Australia are likely to benefit the most from these shifts.

Australia has some wonderful companies but many are not well placed for the future that we envisage.

That’s no surprise because 97% of the world’s listed companies are found overseas. Alphabet (the owner of Google), Apple, eBay, Facebook and Microsoft are world leaders in their fields that have no equivalents on the ASX. Nor, too, do Amazon.com, McDonald’s, Oracle, PayPal or Starbucks to name other foreign stars. Australians are familiar with these names because we use their products and services all the time.

Read more about why you should invest globally

The Magellan approach

Worthwhile companies to own for the long term will generally possess some form of Warren Buffett’s fabled ‘economic moat'

As an active investor, we believe that successful investing is about finding, and owning for the long term, companies that can generate excess returns for years to come. We do not look for stocks that might come into short-term favour on stock markets.

The worthwhile companies to own for the long term will generally possess some form of Warren Buffett’s fabled ‘economic moat’. This term is how Buffett describes a company’s sustainable advantage over competitors that enable a business to earn superior returns that are well above the cost of capital. The pick of these high-quality companies can expand their businesses in the same profitable fashion.

We seek to own such stocks and let compound returns work their magic over time. Even a return on capital that is just a few percentage points higher than that delivered by competitors will create vastly more shareholder value as years go by.

Our investment team seeks to find such stocks by conducting company analysis that we like to think is ‘an inch wide and a mile deep’.

On top of that, we conduct macroeconomic analysis and risk management to construct a portfolio that aims to generate attractive returns over the medium to long-term. Importantly, we seek to invest in a way that reduces the risk of permanent capital loss.

Since we started, our award-winning and highly rated global and infrastructure strategies have delivered attractive returns for clients.

Our Strategies

Magellan manages global equity and global infrastructure funds. Within each category, we offer listed and unlisted options, where the listed options are listed investment trusts or active ETFs found on the ASX. Within each category, we offer options where returns in Australian dollars are hedged or unhedged.

Our global equity funds are designed as core options for investors who would like to achieve attractive risk-adjusted returns over the medium to long term, while reducing the risk of permanent capital loss.

Our global infrastructure funds are designed for investors who seek to benefit from the stable earnings, inflation protection and lower risk of capital losses offer by the asset class.    
 

Global equity funds

Listed

Unlisted

Global infrastructure funds

Listed

Unlisted

Fund performance

30 Jun 2018
Fund 3 Months 6 Months 1 Year 3 Years (% pa) 5 Years (% pa) 7 Years (% pa) 10 Years (% pa) Since Inception (% pa) Inception date Chart
Magellan Global Fund 7.42% 8.13% 16.91% 10.45% 14.28% 18.18% 14.94% 11.57% 1/7/2007
Magellan Global Fund (Hedged) 4.38% 2.51% 13.12% 10.34% 11.71% 11.71% 1/7/2013
Magellan Global Equities Fund (Managed Fund) (ASX:MGE) 7.40% 8.10% 16.89% 10.51% 9.53% 2/3/2015
Magellan Global Equities Fund (Currency Hedged) (Managed Fund) (ASX:MHG) 4.35% 2.44% 13.03% 9.34% 4/8/2015
Magellan Global Trust (ASX: MGG) 6.07% 6.77% 11.38% 18/10/2017
Magellan Infrastructure Fund 4.92% 1.85% 6.92% 11.02% 13.40% 13.16% 11.33% 8.44% 1/7/2007
Magellan Infrastructure Fund (Unhedged) 5.19% 4.30% 9.17% 10.46% 14.59% 14.59% 1/7/2013
Magellan Infrastructure Fund (Currency Hedged) (Managed Fund) (ASX:MICH) 4.87% 1.80% 6.96% 8.05% 19/7/2016
Magellan High Conviction Fund 6.74% 6.32% 18.99% 12.38% 16.81% 16.81% 1/7/2013

Important Information: Calculations are based on exit price with distributions reinvested, after ongoing fees and expenses but excluding individual tax, member fees and entry fees (if applicable). For the ASX Quoted Funds calculations are based on NAVs, published in the ASX announcements for the relevant ASX Quoted Funds, with distributions reinvested, after ongoing fees and expenses but excluding individual tax, member fees and entry fees (if applicable).

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FAQs

Magellan’s listed funds are found on the ASX and you can buy and sell units in these funds as easily as you trade other listed shares. There is no minimum investment requirement for the listed funds with none of the paperwork generally associated with unlisted managed funds.

Magellan’s currency hedged funds substantially hedge the capital component of the fund’s foreign currency exposure arising from investments in overseas markets back to Australian Dollars.

Magellan’s Active ETFs are actively managed investment funds that are quoted on ASX and can be bought and sold just like any other stock listed on ASX. These funds provide investors with easy access to the benefits of investing in global equities and the investment experience and expertise of Magellan.

Magellan’s Global Equities funds typically hold 20-40 high quality investments whereas the MSCI World Index comprises more than 1,600 companies. As our portfolio looks nothing like the MSCI World Index and given our focus on risk and capital preservation, it is inevitable that we will periodically underperform this benchmark.  Over the cycle, however, we believe the strategy will produce appropriate risk adjusted performance while maintaining our focus on capital preservation, particularly in adverse market conditions.

Infrastructure assets generally produce reliable earnings when providing essential services to the community. Over time, the predictable earnings or cash-flow streams derived from infrastructure assets are expected to deliver income and capital growth for investors. Where our strategy is different is that we apply a stricter definition to what qualifies as infrastructure. We believe that a key reason why investors invest in infrastructure is that they seek the reliable returns that are associated with the asset class. To ensure we achieve this key objective we limit our investment universe to stocks that provide investors with predictable, through-the-cycle, inflation-linked returns. This means that we exclude infrastructure stocks whose earnings are exposed to competition, sovereign risk and changes in commodity prices.

We seek to be transparent with our clients and are making the following disclosures in relation to our listed funds:

  • ASX announcements under each ASX code;
  • Estimated Net Asset Value ("NAV") per Unit published on Magellan’s website daily;
  • Indicative intra-day NAV per Unit ("iNAV") published on Magellan's website daily and which is updated throughout the ASX trading day;
  • Monthly fund factsheets on Magellan's website and ASX; and
  • The full portfolio on a quarterly basis with a delay period of no longer than two months on Magellan's website and ASX.

Magellan’s unlisted funds can be accessed through a financial planner – the funds are generally available on all major platforms – or by investing directly with Magellan

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Magellan’s listed funds can be accessed through a financial planner, stockbroker or an online trading account (e.g. CommSec, nabtrade, etc.). Units transact and settle in the same way as normal ASX shares and are settled via CHESS.