Magellan Launches Currency-Hedged Global Equities Active ETF on ASX
Magellan Investment Partners has launched the Magellan Global Equities Fund (Currency Hedged), an actively managed ETF listed on the ASX under ticker MHG, targeting a 9% annual return with integrated ESG considerations.
- Active ETF focused on 20-40 global quality stocks
- Currency exposure substantially hedged to Australian dollars
- Target return of 9% per annum after fees over economic cycles
- Listed under ASX AQUA Rules with distinct disclosure and governance
- Incorporates ESG integration and excludes tobacco and controversial weapons
Magellan’s New Active ETF Launch
Magellan Investment Partners has introduced the Magellan Global Equities Fund (Currency Hedged), an actively managed exchange-traded fund (ETF) now trading on the Australian Securities Exchange (ASX) under the ticker MHG. This fund offers investors direct access to a concentrated portfolio of 20 to 40 high-quality global equities, with a strategic focus on delivering attractive risk-adjusted returns over the medium to long term.
Designed for investors with a high risk tolerance and a minimum suggested investment horizon of seven years, the Fund aims to achieve a 9% annual return after fees over the economic cycle. A key feature is its substantial hedging of foreign currency exposure back to Australian dollars, mitigating the volatility that can arise from currency fluctuations in global markets.
Investment Philosophy and ESG Integration
Magellan’s investment approach is research-driven, emphasizing a rigorous assessment of companies’ economic moats, business risks, reinvestment potential, and environmental, social, and governance (ESG) factors. The Fund excludes investments in tobacco, controversial weapons, and nuclear weapons beyond specified revenue thresholds, reflecting a commitment to responsible investing.
The Fund’s ESG integration is not merely a screening tool but a core component of its fundamental analysis, with proprietary ESG scoring applied to each potential investment. This approach aims to identify companies capable of sustaining and growing profits while managing risks associated with ESG factors over the long term.
Structure, Fees, and Liquidity
Listed under the ASX AQUA Rules, the Fund operates with different disclosure and governance requirements compared to standard ASX listings. Investors can trade units on the ASX like any listed security, with Magellan providing liquidity through a market-making agent. The Fund’s net asset value (NAV) and an indicative NAV (iNAV) are published daily to aid transparency.
The fee structure includes a 1.35% management fee, a modest 0.01% performance fee based on exceeding benchmark hurdles, and transaction costs of approximately 0.03% per annum. There are no establishment, contribution, withdrawal, or exit fees, making it cost-competitive within the active ETF space.
Risks and Investor Considerations
While the Fund seeks to reduce permanent capital loss risk through quality stock selection and currency hedging, it remains exposed to market, concentration, liquidity, and operational risks. The AQUA Rules framework means continuous disclosure obligations differ from traditional ASX listings, which may affect the flow of information to investors.
Investors should also consider the tax implications of investing in the Fund, structured as an Attribution Managed Investment Trust (AMIT), which entails specific tax reporting and potential complexities, especially for non-resident investors.
Overall, the Magellan Global Equities Fund (Currency Hedged) represents a sophisticated option for Australian investors seeking active global equity exposure with currency risk management and ESG integration, all accessible via the ASX.
Bottom Line?
As Magellan’s new active ETF enters the ASX, investors will watch closely to see if its quality-focused, currency-hedged strategy delivers on its ambitious 9% return target amid evolving global markets.
Questions in the middle?
- How will the Fund’s concentrated portfolio perform relative to broader global equity benchmarks?
- What impact will the AQUA Rules’ disclosure differences have on investor confidence and liquidity?
- How effectively will the currency hedging mitigate foreign exchange risks during volatile periods?
