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Magellan Infrastructure Fund (Currency Hedged)

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About this Fund

Fund Detail

PDS https://informedinvestor.com.au/view/pds/100027-2023-11-28-02:38.pdf
FUND MANAGER Magellan Asset Management Ltd
ASX Code MICH
APIR
ASSET CLASS ACTIVE EXCHANGE TRADED FUNDS
INVESTMENT STYLE The Fund offers investors an opportunity to invest in a specialised and focused global infrastructure Fund.
INVESTMENT PROFILE The Fund aims to achieve attractive risk-adjusted returns over the medium to long term while minimising the risk of permanent capital loss.
CURRENCY MANAGEMENT Hedged
INCEPTION DATE 19-07-2016
BENCHMARK S&P Global Infrastructure Index A$ Hedged Net Total Return
FUND SIZE S&P Global Infrastructure Index A$ Hedged Net Total Return
DISTRIBUTION FREQUENCY Half-yearly
NO. OF HOLDINGS 20-40
FEES 1.06% p.a.
STRUCTURE

Benefits

Benefits

Benefits of investing in the Magellan Infrastructure Fund (Currency Hedged)

Investing in the Fund offers investors a range of benefits, including:

  • the ability to trade the Units on the ASX during normal ASX trading hours;
  • the ability to track the performance of the Units on the ASX in a transparent manner;
  • access to the Responsible Entity's investment expertise and a professionally managed global equity portfolio;
  • access to attractive global listed infrastructure investment opportunities;
  • hedging of foreign currency exposure;
  • prudent risk management; and
  • participation in any capital appreciation and income distributions of the Fund.

 

RISK LEVEL High
INVESTOR SUITABILITY

An investment in the Fund may suit you if you are seeking a long-term investment exposure to listed international infrastructure equities.

Risks

Title
Detail

Key Features

Significant Features

The Investment Manager aims to invest in companies that generate the dominant part of their earnings from the ownership of infrastructure assets. The Investment Manager endeavours to acquire these companies at discounts to their assessed intrinsic value.

The Fund’s portfolio will comprise 20 to 40 investments. The Investment Manager believes such a portfolio will achieve sufficient diversification to ensure the Fund is not overly correlated to a single company, or to macroeconomic risks.

It is the Investment Manager’s intention to substantially hedge the capital component of the foreign currency exposure of the Fund arising from investments in overseas markets back to Australian Dollars

Investment philosophy

The Magellan Infrastructure Fund (Currency Hedged) has been designed to provide investors with efficient access to the infrastructure asset class, while protecting capital in adverse markets.

The infrastructure asset class, when appropriately defined, is characterised by monopoly-like assets that face reliable demand and enjoy predictable cashflows. As a result, Magellan has established proprietary classification criteria to appropriately categorise securities as investment grade infrastructure, and thus eligible for inclusion in its portfolios or otherwise. Potential investments that meet these criteria are expected to achieve strong underlying financial performance over medium- to long-term timeframes, which should translate into reliable, inflation-linked investment returns.

Magellan believes that an appropriately structured portfolio of 20 to 40 investments can provide sufficient diversification to ensure that investors are not overly correlated to any single company, industry-specific or macroeconomic risk.

Mandate

How we invest your money

Portfolio construction

The Fund's investment process integrates three key stages:

  1. Determining the investment universe: Only securities that meet Magellan's proprietary infrastructure classification criteria are included in the Magellan Infrastructure Fund's investable universe. In order for a security to meet this definition, its underlying business must provide a service that is essential to the efficient functioning of a community, while generating cash flows that are not subject to external risks such as commodity prices. Furthermore, Magellan evaluates other criteria, such as gearing levels, sovereign risk, regulatory risk and reporting transparency, which, if failed, will result in exclusion from the investment universe. Magellan believes that by excluding businesses that fail to meet these criteria, the universe consists purely of companies that enjoy reliable demand and generate predictable cash flows.
  2. Assessing each potential investment's quality and intrinsic value: Each security in the investment universe is subjected to detailed analysis. This analysis includes evaluations of a company's external environment, its business's specific issues, its historical financial performance and its valuation.
  3. Allocating capital to the securities within the investment universe in an appropriate manner: Portfolio construction is driven by the results of qualitative stock analysis, valuation, formal risk controls and factor risk management. The portfolio construction process focuses on long-term value rather than index-relative positioning.

The resulting portfolio provides investors with exposure to securities that meet Magellan's infrastructure classification criteria, while giving consideration to each security's quality and its price relative its assessed intrinsic value.

Investments held

The Fund primarily invests in the securities of companies listed on stock exchanges around the world, but will also have some exposure to cash & cash equivalents. The Fund can use foreign exchange contracts to facilitate settlement of stock purchases and to mitigate currency risk on specific investments within the portfolio. It is our intention to substantially hedge the capital component of the foreign currency exposure of the Fund arising from investments in overseas markets back to Australian Dollars.

Asset classes and allocation ranges

The Fund's assets are typically invested within the following asset allocation ranges:

  • Global listed securities: 80% - 100%
  • Cash and cash equivalents: 0% - 20%

Borrowing restrictions

The Fund may borrow against all or part of its investment portfolio, provided that, at the time any new borrowing is entered into, the aggregate of those new borrowings and any pre-existing borrowings does not exceed 5% of the Fund's gross asset value.