06-May-2020: DDD20 Day 1
That link takes you to the video of Day 1 of Digital Design Days 2020 (DDD20, held last week). Some of the companies presenting include PayPal, Dotlung.com (Mother of Social Media Dragons), LinkedIn, Airbnb & Amazon's Alexa, as well as the founder of DDD and a few journos. Magellan (MFG) is one of the companies that invests in these sorts of companies, like eBay - who owns PayPal, Alphabet - who owns Google, Microsoft Corporation - who own LinkedIn, Tencent - who own WeChat and WeChat Pay, Alibaba - who own AliPay and many other businesses, and Facebook - who own WhatsApp and Instagram.
For a LIT that gives you exposure to all of those, Magellan's MGG is one option. You buy/sell units in MGG on the ASX just as you would buy shares in any company, and you have exposure to all of those global IT giants (but not Amazon, because Hamish Douglass regards Amazon as too expensive to buy).
In the USA, IT (information technology) as a sector represents 25.7% of their entire market (NASDAQ + NYSE) whereas it represents just 3.7% of our Australian market. IT is the largest sector in the US, followed by Health Care (at 15.4%) and then Communication Services (10.8%). Our top 3 are Financials (24.4%, thanks mostly to our big 5 banks), Materials (/Mining, 19.1%, thanks mostly to BHP & RIO) and Health Care (12.5%, thanks mostly to CSL, RHC, SHL & COH). We have our WAAAX stocks, but we don't have the stocks with the global footprints of the FAANGs and the two fast-growing Chinese giants (Alibaba & Tencent).
I currently hold shares in PAI, WQG, MGG & MHH for that global IT exposure.
MGG (the Magellan Global Trust) is a LIT (Listed Investment Trust) that invests in leading global businesses such as Alphabet (Google), Facebook, Microsoft, Mastercard, Visa, Apple, Oracle, Starbucks and Yum! brands. With a superstar PM (portfolio manager) in Hamish Douglass, who has an enviable track record of outperformance, MGG is a very convenient way for Australian investors to easilly gain exposure to those leading global names via an ASX-listed vehicle.
Hamish keeps moving the bar higher. He followed Steve Johnson's FOR in absorbing all of the listing (IPO) costs (which were paid by the investment manager - Magellan Financial Group - MFG - in this case - rather than being paid by the trust) which meant there was zero dillution - the starting NAV was the price people paid for their MGG units. Since then, MGG has traded at a premium to NAV, but is now trading at a discount to NAV, as all globally-focussed LICs and LITs seem to do here in Australia.
MFG have also paid the costs associated with the MGG DRP (distribution reinvestment plan) and the recent MGG UPP (unit purchase plan). They also paid the costs associated with the bonus "loyalty units" that were part of the IPO. Additionally, MGG have a stated minimum 4% target distribution yield, and have just declared their latest distribution - which is 3c per unit (unfranked) for the 6 months to June 30 2019 (to be paid on July 29th). They are paying out 6c annually, which is a 3.36% annual yield based on yesterday's closing price (26-June-2019: $1.785) and 4% based on their $1.50 IPO issue price.
Normally, unit trusts have to distribute 100% of all profits to their unitholders every year, but Magellan have gotten around that with a rather innovative compulsory partial distribution reinvestment plan set-up. Hamish is pushing the edge of the envelope in a number of areas with MGG.
Here's a link to their website: http://www.magellangroup.com.au/funds/magellan-global-trust-asx-mgg/
And their May 31st 2019 update can be viewed here.
Disclosure: I hold MGG shares, having participated in their IPO and having bought more shares during their recent UPP. Our two children - who are 12 and 16 - recently asked me to invest $1,000 for each of them into the sharemarket (their money, which they had saved up over several years), and I invested half in MGG and the other half in FGX - the Future Generation Investment Company. FGX gives them broad exposure to Australian equities, and MGG gives them exposure to leading global companies including global tech names that they know well (Apple, Google/Alphabet, Microsoft, Facebook, etc.). I could have chosen FGG (Future Generation Global) for the global exposure, but I went with MGG because of their top 10 holdings.
Magellan Financial Group (MFG, who manage MGG) is one of the fund managers used by FGG to manage their investments. Magellan Asset Management were managing 11.6% of FGG's money on May 31st 2019 (in the Magellan Global Fund), more than any other fund manager. In the #2 position was Cooper Investors (in their Global Equities Fund - unhedged) with 10.8%, and Antipodes Partners (the Antipodes Global Fund) were #3 with 9.9%. Part of the reason that Magellan are the #1 fund manager for FGG is their leading position in the industry - meaning that they got the maximum allocation of funds from the FGG investment committee - and the other part is that Magellan have managed to grow those funds better than most, if not all, of the other fund managers - so - outperformance. All of the fund managers used by FGG provide their services to FGG free of charge (pro bono) - for more on FGG, see here.
At the mid-point of the latest FG Investment Forum (held last month), there is an excellent interview with Hamish Douglass which I definitely recommend watching: http://www.livewiremarkets.com/wires/future-generation-investment-forum-may-2019
That interview starts at the 43:40 mark of the video that you'll find on that page.
Copied from a straw I just posted under MFG (MFG being the manager of MGG):
"We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten." - Bill Gates
Magellan vs Platinum, or Hamish Douglas vs Andrew Clifford:
17-Sep-19 - The two CIOs of our two most prominent ASX-listed global funds management businesses (MFG & PTM) have been doing a few odd joint interviews over the past year or two, and this one is a good one. In this "Livewire Live 2019" piece, Patrick Poke from Livewire Markets reviews the latest joint interview between those two CIOs whose views are often very, very different (but who both own Ali Baba, the "Amazon of China"; in fact, Magellan are a top-10 shareholder of Ali Baba).
If you want to skip to the video - click here: https://youtu.be/7Mp2gctWb6k
I always think that Hamish Douglass comes off looking and sounding far better than Andrew Clifford does whenever they go head to head, but good on Andrew for having a go once more. It is interesting how they have similar ideas or viewpoints on some things, such as the opportunity that exists in the rise of the Chinese consumer (& associated consumer expenditure in China) but how they tend to approach participation in that theme in completely different ways (- for the most part, except for Ali Baba clearly, which they both hold). Anyway, I strongly recommend watching this video.
Magellan has two key consultants on the topic of interest rates; Kevin Warsh, a former Federal Reserve member who may serve as the next President of the Fed, and none other than Janet Yellen herself, the previous President of the Fed. Hamish says their advice played a role in him adjusting his views on rates. He now sees three percent as a base case for long term rates, but says that scenarios between zero and two percent shouldn't be ruled out. These sort of insights have implications for the Australian market as well of course.
Andrew's view is that negative interest rates are unsustainable and could destroy the banking sector in some countries, so he believes that central banks have done about as much as they can and we're going to get fiscal stimulus in a range of countries and regions and that could lead to increased demand for materials and that in turn could lead to inflation which would support higher rates.
Hamish says that, above all, locking yourself into one view and one position is dangerous and you have to be ready to adapt quickly, because while it's good to have a view (and they have a view) on what is most likely to happen, you have to keep in mind that a range of other eventualities is entirely possible. He also said that while he has the best advisers, his team doesn't always agree with them either. So, have a view based on good, sound reasoning, and position accordingly, but don't be locked in to that position - be ready to adapt - and fast, because things can and do change, and sometimes very rapidly. Very good reading/viewing!
"Expect volatility but don't panic, would be my view, because before 12 months, I think we'll be looking back, and this event will have passed."
This is the view Magellan's Hamish Douglass delivered to the thousands of investors who packed Sydney's International Convention Centre on Friday night [06-Mar-2020] to hear his latest update.
With fears about the coronavirus pushing stocks closer to a bear market, Douglass adopted a relaxed tone, telling investors to sit tight and take a long-term view. He told the crowd of advisers, industry professionals, retail investors and students.
"Our best view is that this may be six times as serious as the seasonal flu.
"While [the virus] is going to affect a lot more people, I think the spread may well be less because of the extreme containment measures. But with the extreme containment measures is going to come a pretty sharp economic impact around the world, which will realistically be three to six months.
"During that period, I would expect a lot of share price volatility as people react to the headlines. I think if we look a little bit longer out, this flu or pandemic or whatever you want to describe it will have its consequences. But the economic effect is likely to pass very quickly."
Douglass avoided discussing the virus for much of the presentation, devoting his time on stage to how interest rates will affect equity valuations and the rise of the Chinese consumer.
But talk of the virus, which dominated headlines for the days leading up to the event, infected audience question time.
[...Click on link above for more...]
Also includes the Magellan Global Fund Portfolio Top 10 Holdings, as at 31/12/2019. MGG (the LIT) held a very similar top 10 - they list their 31-Dec-19 top 20 holdings here and they provided a portfolio update after the market closed on Friday (13-Mar-2020) - which can be viewed here - and includes their top 10 holdings as at 29-Feb-2020.