INVESTING

Top global fund listing on the ASX

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One of Australia's top-performing global funds is listing on the ASX to attract do-it-yourself investors who like the ease of listed funds. The Magellan Global Equities Fund (ASX: MGE) is a version of its highly successful $7 billion unlisted Magellan Global Fund, which has returned over 18% a year net of fees over the past five years. This is a 4.6%pa outperformance of the benchmark since 2000.

This is an exchange traded managed fund (ETMF) and joins six other ETMFs on the ASX. It is different from the popular range of ETFs largely because it is actively managed rather than following an index. While ETFs are typically low-cost investments, the Magellan fund charges a management fee of 1.35% plus a performance fee.

It will be quoted on the ASX AQUA platform and can be bought and sold via CHESS. This avoids the administrative complexities associated with investing in unlisted funds.

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While ETFs are heralded for their transparency - you can look up the investment portfolio each day - because of the intellectual property involved the Magellan fund reveals its portfolio only quarterly.

Magellan chief executive Hamish Douglass says the launch became possible only because of changes to disclosure requirements. He says active ETFs are rare in the Australian investing landscape. Globally they make up less than 1% of total ETFs and in the US there are 49 that are largely active bond ETFs, dominated by Pimco's bond ETFs.

Money verdict

This is an easy way to buy into an actively managed global fund. While past performance is no indication of what will happen in the future, Magellan has an impressive record. In many ways this fund is similar to an ETF. It is listed on the ASX, liquid and open-ended. But it is more like a listed investment company (LIC): actively managed with a high investment management fee, plus a performance fee. But the fund trades at close to net asset backing, unlike a LIC, which can be over or under net tangible assets.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.
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