Magellan Global Trust

Release of Weekly NAV and Fund Update: Magellan Asset Management Limited had stated that the NAV per unit of Magellan Global Trust (ASX: MGG) stood at $1.7350 as at April 18, 2019, which is a marginal decrease of 0.2% in NAV from $1.7377 as on April 12, 2019.Recently, Magellan Global Trust also released the fund update at the end of March 31, 2019. As per the update, the portfolio witnessed positive return for the quarter ended March 2019 and, for the same period, the biggest contributors included investments made in Facebook, Apple and Microsoft. Facebook witnessed the rise after better-than-expected revenue numbers for Q4 of US$16.9 billion demonstrated that the users as well as advertisers were with the company despite there have been concerns about the privacy and other scandals. However, the two detractors were investments made in Kraft Heinz as well as Berkshire Hathaway. On the investment portfolio front, MGG reported a decent performance for March month wherein MGG Investment Portfolio delivered a good return of 2.9% in one month (as of 31 March 2019) as compared to MSCI World Net Total Return Index (AUD) returns of 1.5%, exhibiting a growth of 1.4%. For six months’ performance, MGG Investment Portfolio delivered decent returns of 1.4% (as at 31 March 2019) against the benchmark return of -0.8%. As at 31 March 2019, the trust has total funds size of approximately A$2,131.5 Mn.
 

Sector Exposure by Source of Revenue (Source: Company Reports)

The release of MGG stated that the global stocks delivered strong quarterly performance in the March 2019 quarter after the US central bank indicated that it no longer held to forecasts it gave in December when it stated that it would be conducting 2 rate increases in 2019, the US government delayed increasing the tariffs with respect to Chinese imports as well as after it was noticed that the US economy was expanding at the fast-enough pace.

What To Expect From MGG: The results of MGG’s operations is expected to be affected by the numerous factors which include the performance of investment markets in which it invests. Also, as per the recent fund update, 20% of the revenues are being contributed by the information technology sector and 15% is being contributed by the internet and e-commerce sector. As a result, the fund’s performance is expected to be sensitive to the performance of the broader technology sector.

Stock Recommendation: The stock of Magellan Global Trust has delivered the return of 0.29% in the span of previous three months while, in the time frame of six months, the stock posted 1.19% return. Also, in the recent update, Alphabet Inc and Facebook Inc-A are amongst the top 10 holdings of the fund and these companies are fundamentally strong which further strengthen the confidence in MGG’s investment capabilities. If the global economic conditions stabilize moving forward, it would be beneficial for the broader equity markets which might help Magellan Global Trust.

Hence, considering the above parameters, we reiterate our “Buy” recommendation on the stock at the current price of A$1.695 per share (down 0.294% on 23 April 2019).
 

WAM Global Limited

Portfolio Update: WAM Global Limited (ASX: WGB) is focused on small-to-mid-cap companies and when it comes to portfolio composition by the geography, United States of America makes up for 53.0%. The MSCI World Index (AUD) witnessed a rise of 1.5% in March while S&P Global Mid Small Index in AUD terms encountered a decline of 0.2%. WGB’s gross assets at the end of March 2019 stood at $454.2 million. As per the release, the best performing global sectors were information technology, consumer staples as well as real estate and, on the other hand, industrials and financials lagged. During March 2019, the contributors to investment portfolio performance were Bandai Namco, Thermo Fisher Scientific as well as Worldpay.   
 

Portfolio Composition by Geographical Exposure (Source: Company Reports)

The negotiations with respect to Brexit dominated the global news headlines during March without the resolution and the talks related to the trade war between the US and China were also there.

What To Expect From WGB: WAM Global Limited is expected to remain focused towards the macro-economic factors and their impact on the markets as well as the company’s results. The key personnel had earlier stated that the portfolio is having quality companies and there are expectations that they would perform over the medium term.

Stock Recommendation: The stock of WAM Global Limited delivered the return of -9.91% in the span of previous six months while, in the time frame of previous three months, the returns stood at -4.26%. Moving forward, the stability in global market conditions is necessary which can help the broader momentum of the markets and this might help WGB. Also, the company’s stock price is trading slightly towards the 52-week lower level, proffering a decent opportunity for accumulation. Hence considering decent portfolio returns over the medium term backed by its investment strategy in the portfolio, we give a “Buy” recommendation on the stock at the current market price of A$1.915 per share (up 0.262% on 23 April 2019).  
 

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