Magellan Financial Group is set to float a new ASX-listed investment trust, the Magellan Global Trust (MGT). The Trust will invest in a focused portfolio of high quality global companies and it intends to target a 4% cash distribution yield.
MGT will be a closed-end investment trust listed on the ASX which will invest in a portfolio of between 15 and 35 companies of “high quality” global companies. The investment mandate will be flexible to enable the Magellan Global Trust to hold up to 50% of the portfolio in cash. Magellan also intends to manage the currency exposure. Magellan’s Chief Executive Mr. Hamish Douglass and Mr. Stefan Marcionetti will be acting as the portfolio managers.
MGT plans to pay its cash distribution semi-annually. The first distribution of 3.0 cents per unit is expected to be paid in January 2018 and the second distribution of 3.0 cents per unit is expected to be paid in July 2018.
Mr Douglas commented saying: “We believe that the Magellan Global Trust will be an attractive vehicle for investors making an investment in global equities. We believe that many retail investors value regular cash distributions and this has been missing in many global equity products. We consider that the target 4% cash distribution yield differentiates this offering from many other global equity products.”
The initial public offering (IPO) will comprise a Priority Offer for Magellan shareholders and a broker firm/general public offer. Commonwealth Securities, National Australia Bank, Ord Minnett and Taylor Collison will act as lead brokers, while the co-managers include Bell Potter, JBWere, Morgans Financial, and Macquarie Equities. The record date for determining eligibility for the Priority Offer was 1 August 2017.
This IPO is another example of diversified income strategy products coming to market for investors looking for alternative ways of generating yield from their portfolio.