What is Magellan?
Magellan is a funds management business that largely invests in international shares like Facebook and Visa. It was set up in 2006 by Hamish Douglass and Chris Mackay. Since inception, Magellan claims it has been one of the most consistent market outperformers after fees.
Magellan announces a new ETF
The fund manager has announced that it is launching the Airlie Australian Share Fund as an active ETF. It will trade under the ticker ‘AASF’.
Some investors prefer using unlisted funds and others like a fund quoted on a stock exchange. Magellan says this will provide investors, advisers and brokers with a single, open-ended fund which can be accessed in whichever way they prefer.
Investors will be able to buy and sell units on the stock market and settle via CHESS, with real time and transparent market pricing.
Airlie’s investment approach to investing uses a “conservative and robust process that weighs the financial strength, business quality, quality of management and valuation of each company.” It has outperformed the Australian share market by 6.6% net of fees over the past 12 months to 31 May 2020. It aims to have between 15 to 35 shares.
Magellan CEO Brett Cairns said: “Magellan has always focussed on simplifying the investment process for our investors and reducing unnecessary frictions and costs. We intend to use these next generation open-ended funds to deliver effective investor solutions in the future.”
For May 2020, Magellan saw its FUM increase from $95 billion to $98.5 billion. This was despite Magellan experiencing net outflows of $288 million, which included net retail inflows of $228 million and net institutional outflows of $516 million.
Looking at the strategies, global shares grew FUM from $74.1 billion to $75 billion. Infrastructure shares grew FUM from $16 billion to $16.3 billion. Australian shares grew FUM from $6.8 billion to $7.1 billion.
I think Magellan is one of the most forward thinking fund managers in Australia. But it’s priced as such. I’d be very interested in owning Magellan shares, but right now I’d only considering buying for less than $50 – not around $60. Another fund manager I have my eyes on is Australian Ethical (ASX: AEF).
Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.