MFG Core ESG Fund (Managed Fund) (TICKER:MCSE)

An actively constructed, systematically managed and continuously monitored ESG-focused portfolio of 70-90 of the world’s best businesses, leveraging Magellan’s quality investment research capabilities, investment philosophy and proven ESG framework.

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Fund overview

A diversified global equities portfolio of 70-90 of the world’s best companies – those with sustainable competitive advantages and business models that meet our nuanced and proven ESG risk assessment process.

Why ESG?

What does ESG and sustainable investing really mean? Read our new flyer 'Making sense of Sustainable and ESG investing'.

Find out more (PDF)

These competitive advantages enable them to continually earn excess returns above their cost of capital. Constructed using Magellan’s long-standing proven investment process, the investment team conducts extensive fundamental research to assess a company’s economic moat, potential impacts of disruption, ESG risks and opportunities, value, and key risks and exposures.  The portfolio is systematically rebalanced on a quarterly basis using these inputs. It is not the manager’s intention to hedge the foreign currency exposure of the Fund arising from investments in overseas markets.

Investment objective

The MFG Core ESG Fund seeks to achieve attractive risk-adjusted returns over the medium to long term through investment in a diversified portfolio of high quality companies. This objective incorporates consideration of environmental, social and governance risks and the application of a proprietary low carbon framework.

Fund features

  • Proprietary low carbon and ESG framework

  • High quality global companies

  • Diversification

  • Exchange quoted on Chi-X

  • Risk conscious

  • Resilient portfolio of 70-90 stocks

  • Attractively priced (0.50%)

  • Fully invested

ESG and Sustainable Investment Philosophy 


 

"The MFG Core ESG Fund provides investors with an investment option to reduce ESG risks, whilst continuing to invest in what Magellan is known for; high quality global companies with sustainable competitive advantages." Elisa Di Marco – Portfolio Manager, MFG Core ESG Fund

Meet the Portfolio Manager: Elisa Di Marco

(viewing time: 9:26 mins)

 

Magellan has always had a consideration for ESG factors, with ESG embedded in its investment process since the start of the business in 2007.

From day one, we've invested in businesses based on quality and risk. ESG is a fundamental pillar of risk assessment, and a key part of how we invest. Over the last 5 years Magellan’s ESG team has further honed this investment philosophy and built a unique proprietary low carbon framework, designed from the ground up to solve for carbon and ESG risks. Our ESG philosophy is simple in idea, but nuanced and considered in execution. We seek to identify ESG risk factors that may have a material impact on cashflows or valuation.

ESG investing is a broad topic that encapsulates the Environmental, Social and Governance risks and opportunities that a company and industry is exposed to. There are many nuances and lenses through which ESG investing is defined and assessed as the requirements, technology and expectations differ by investor, company, sub-industry and geography.

At Magellan, we consider factors that may have a wide-ranging, long-term impact on our society. Our philosophy and process are not constrained by a checklist, or by ticking boxes. Instead, we focus on the future, by investing in companies we believe to have a sustainable competitive advantage and that do not have a detrimental impact on the environment or our lives.

Our ESG risk assessment process

The Magellan proprietary ESG risk framework, assesses the degree to which ESG factors have a material impact on cashflows. The approach is nuanced and thoughtful, acknowledging and engaging with the complexities of ESG investing.

  • 1

    ESG risk assessment
    Bottom up approach to the assessment of ESG risk. Our approach is active, balanced and nuanced. Scores are forward looking, reviewed by the Investment Committee and actively monitored.

  • 2

    Low carbon framework
    Exclusions based on carbon intensity and carbon exposure (e.g. high exposure to fossil fuels). This limits the explicit risk and exposure to decarbonisation.

  • 3

    ESG portfolio exclusions
    We exclude companies in controversial industries that we view as higher risk to causing a detrimental impact on society, for example high-roller gambling, alcohol and tobacco.

  • 4

    Active engagement
    Active engagement in proxy voting and engagement with companies on material ESG issues that are of concern to Magellan. Engagement on Governance reflects our explicit policies; Environmental and Social outreach is company and issue specific.

Fund Facts

Portfolio manager
Structure
Global Equity Fund, A$ Unhedged
Inception date
11 December 2020
Fund size*
A$10.5 million
Chi-X Ticker
MCSE
Intraday Indicative Nav**

Ticker Details
  Units Indicative NAV
Bloomberg MCSE AU EQUITY MCSEAUIV INDEX
Thomson Reuters MCSE.CHA MCSEAUiv.P
IRESS MCSE .CXA MCSE-AUINAV.NGIF
Buy / Sell Spread
0.10%/0.10%
(only applicable to investors who apply for units directly with the Fund)
Management fee
0.50% p.a.
Distribution Frequency
Semi-annually
Benchmark
MSCI World Net Total Return Index (AUD)
APIR Code
MGE8722AU

All management costs described above are inclusive of the estimated net effect of GST.

* As at 31 December 2020

** The iNAV reflects the estimated NAV per Unit updated for portfolio stocks or equivalent securities that have live market prices during the Trading Day. The iNAV will not be updated for market-based movements such as movements in stock market indices.

iNAV calculations as shown on www.mfgcoreseries.com.au (the "data") provided by ICE Data Indices, see ICE Terms of Use, and is updated during Chi-X trading hours. Powered by Factset. iNAV is indicative and for reference purposes only. The Fund is not sponsored, endorsed, sold or marketed by ICE Data Indices, LLC, its affiliates ("ICE Data") and ICE Data or its respective third party suppliers MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE iNAV, IOPV, FUND OR ANY FUND DATA INCLUDED THEREIN. IN NO EVENT SHALL ICE DATA HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, DIRECT, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. You acknowledge that the data is provided for information only and should not be relied upon for any purpose.

Portfolio Construction

At Magellan, when investing we ask ourselves, what does the future look like?

We regard the identification of a business’s economic moat, or sustainable competitive advantage as key to investing with a long-term horizon. Identifying businesses with strong moats, sensible management, the ability to invest capital at high rates of return and with discernible tailwinds, means we are positioning our portfolio towards those businesses that are most likely to succeed and thus enabling better outcomes for our investors.

The investment process is predicated on building in-depth knowledge and expertise on the economics and key risk considerations of each business within our universe.

Born out of Magellan’s investment research DNA, the MFG Core ESG Fund focuses on five key factors when identifying the universe and assessing businesses, including our proprietary ESG risk assessment process.

  • ESG Risk: Sustainable business models that limit portfolio exposure to the risks that have a wide-ranging detrimental impact on society.
  • Economic Moat: High quality equity investments that reflect Magellan’s proprietary economic moat assessment.
  • Disruption: Companies that benefit from or are protected from the forces of disruption, a forward assessment based on Magellan’s proprietary research.
  • Value: Companies that represent relative value based on tailored criteria encompassing cash flows, incentive payments, capital requirements, growth.
  • Risk Assessment: Utilise sensible strategies to reduce exposure to material specific downside risks.

Step 1: Assessed Investment Pool > Product universe

As the world is always changing, high quality companies may have their, competitive advantage eroded as a result of technology, evolving competitive threats, changes in consumer behaviour or other factors.  As a result, the investment universe for the fund is comprised only of companies that meet our considered definitions. These definitions aim to identify companies that meet our definition of an acceptable ESG risk profile, the existence of an economic moat and resilience to disruption based on our proprietary research of each company. Via rigorous fundamental research, this forward-looking approach seeks to identify high quality companies with sustainable business practices and reduce ESG risk exposure.

 

Step 2: Stock Scoring

Using our proprietary MFG Core Series scoring framework, stocks that qualify under our in-depth assessment of quality are scored on the basis of their competitive advantages and resilience to, or opportunities from, disruption.

Each company is then also scored on the basis of valuation, based on stock and industry specific considerations, including sustainable growth opportunities, returns on capital, cash generation and of course ESG risks. This is not a simple assessment of low vs high PE which on its own can often be a poor guide to the best investments on a forward-looking basis.

This process requires rigorous fundamental analysis of each business and industry and a qualitative assessment of key risks including those related to debt, valuation and idiosyncratic event risk.

Step 3: Portfolio Construction with active inputs

These active portfolio construction inputs are then synthesized into a systematic portfolio management process where high scoring companies are included in the portfolio subject to considerations of geographic and industry exposure and specific risk assessments.  

 

Step 4: Continuous Monitoring

Companies are continuously monitored, with changes to our assessment of quality, valuation and risk reflected in the portfolio at scheduled, quarterly rebalance dates.

Meet the Portfolio Manager

Elisa Di Marco

Elisa Di Marco

Portfolio Manager

Elisa Di Marco joined Magellan in 2015 with responsibility for research coverage in the financials sector. In 2019, Elisa joined the Core Series team and in 2020 Elisa joined the ESG team and was appointed PM of the MFG core ESG fund. Prior to Magellan, Elisa spent two years as an analyst at APRA, primarily stress testing and supervising Australian financial institutions. Elisa also worked at Macquarie Group as an equity analyst covering banks and at NYSE Euronext Paris in surveillance and research.

Elisa holds a Bachelor of Commerce (Honours) from the University of Wollongong and a Doctor of Philosophy from the University of New South Wales.

Performance

31 January 2021
Performance Since Inception**
(%)
MFG Core ESG - 3.06%
Benchmark* - 0.69%
Out/Under Performance - 2.37%

Click here for further information on the benchmark.

Important Information: Calculations are based on exit price with distributions reinvested, after ongoing fees and expenses but excluding individual tax, member fees and entry fees (if applicable). Inception date 1 June 2018.

Growth of AUD $10,000
31 January 2021

Click here for further information on the benchmark.

Important Information: Calculations are based on exit price with distributions reinvested, after ongoing fees and expenses but excluding individual tax, member fees and entry fees (if applicable). Inception date 1 June 2018.

31 December 2020

  % weight
Kering SA 2.5%
Intercontinental Exchange Inc 2.5%
LVMH Moet Hennessy Louis Vuitton 2.4%
Yum! Brands Inc 2.2%
McDonald's Corporation 2.2%
  % weight
Alphabet Inc 2.1%
MSCI Inc 2.1%
Microsoft Corporation 2.1%
Adobe Inc 2.0%
Alibaba Group Holding Ltd 1.9%

Unit Prices

Estimated nav per unit as at 24/02/2021: 3.43
Date Net Asset Value Entry Exit
23/02/2021 3.4249 3.4283 3.4215
22/02/2021 3.4255 3.4289 3.4221
19/02/2021 3.4784 3.4819 3.4749
18/02/2021 3.5422 3.5457 3.5387
17/02/2021 3.5493 3.5528 3.5458
16/02/2021 3.5581 3.5617 3.5545
15/02/2021 3.5495 3.5530 3.5460
12/02/2021 3.5558 3.5594 3.5522
11/02/2021 3.5428 3.5463 3.5393
10/02/2021 3.5372 3.5407 3.5337
09/02/2021 3.5393 3.5428 3.5358
08/02/2021 3.5381 3.5416 3.5346
05/02/2021 3.5544 3.5580 3.5508
04/02/2021 3.5644 3.5680 3.5608
03/02/2021 3.5213 3.5248 3.5178
02/02/2021 3.5482 3.5517 3.5447
01/02/2021 3.4763 3.4798 3.4728
29/01/2021 3.3906 3.3940 3.3872
28/01/2021 3.4516 3.4551 3.4481
27/01/2021 3.4050 3.4084 3.4016
25/01/2021 3.4779 3.4814 3.4744
22/01/2021 3.4730 3.4765 3.4695
21/01/2021 3.4695 3.4730 3.4660
20/01/2021 3.4866 3.4901 3.4831
19/01/2021 3.4548 3.4583 3.4513
18/01/2021 3.4454 3.4488 3.4420
15/01/2021 3.4336 3.4370 3.4302
14/01/2021 3.4186 3.4220 3.4152
13/01/2021 3.4617 3.4652 3.4582
12/01/2021 3.4628 3.4663 3.4593
11/01/2021 3.4923 3.4958 3.4888
08/01/2021 3.4918 3.4953 3.4883
07/01/2021 3.4707 3.4742 3.4672
06/01/2021 3.4440 3.4474 3.4406
05/01/2021 3.4661 3.4696 3.4626
04/01/2021 3.4841 3.4876 3.4806
31/12/2020 3.5104 3.5139 3.5069
30/12/2020 3.5103 3.5138 3.5068
29/12/2020 3.5330 3.5365 3.5295
24/12/2020 3.4978 3.5013 3.4943
23/12/2020 3.4986 3.5021 3.4951
22/12/2020 3.5349 3.5384 3.5314
21/12/2020 3.5092 3.5127 3.5057
18/12/2020 3.5226 3.5261 3.5191
17/12/2020 3.5226 3.5261 3.5191
16/12/2020 3.5136 3.5171 3.5101
15/12/2020 3.5069 3.5104 3.5034

3 ways to access MFG Core ESG Fund

MFG Core ESG Fund (Managed Fund) (TICKER:MCSE)

  1. View the indicative Net Asset Value (iNav)*


    Ticker Details
      Units Indicative NAV
    Bloomberg MCSE AU EQUITY MCSEAUIV INDEX
    Thomson Reuters MCSE.CHA MCSEAUiv.P
    IRESS MCSE .CXA MCSE-AUINAV.NGIF
  2. Check the current share price MCSE

  3. Buy on the Chi-X securities exchange - Ticker Code MCSE

Investors should read the Product Disclosure Statement (PDS) prior to making any investment decisions.

Additional information and forms

MFG Core ESG Fund (Managed Fund) (TICKER:MCSE)

1. Read the Product Disclosure Statement (PDS)

2. Click here to APPLY NOW and start your online application process.

You will need the following information handy to support your online application:

  • Identification documents (e.g. drivers license) 
  • Mobile number and email address
  • Your Tax File Number (TFN)
  • Complete the FATCA/CRS verification (if applicable)

Note: Magellan accepts initial direct investments from individuals with a minimum of $10,000.  You must be over 18 years of age.

Additional information and forms

  • Check your balance(s), view transaction confirmations and periodic statements.
  • Update your personal details.
  • Transact*, including invest additional funds, switch or withdraw.
  • Participate in the Distribution Reinvestment Plan (DRP).
  • Provide your FATCA/CRS certification.

MFG Core ESG Fund (Managed Fund) (TICKER:MCSE)

Speak with your adviser/broker. To find an adviser, visit the 'Financial Planning Association of Australia (FPA)' or 'Your best interests' website

Investment Insights

FAQs

The MFG Core Series are quoted on the Chi-X securities exchange and can be bought and sold like any listed security. Alternatively investors can apply and redeem directly with Magellan. See How to Invest for more information.

Chi-X Australia is an innovative Australian securities and derivatives exchange. Funds that are quoted on Chi-X can be bought and sold like any listed security via a stockbroker or online trading account.

When buying units on the securities exchange, there is no minimum initial investment. When applying directly with Magellan, the minimum initial investment is $10,000.

We seek to be transparent with our clients and are making the following disclosures in relation to our listed funds:
 

  • Securities exchange announcements under each ticker code;
  • Estimated Net Asset Value ("NAV") per Unit published on MFG Core Series' website daily;
  • Indicative intra-day NAV per Unit ("iNAV") published on MFG Core Series' website daily and which is updated throughout the trading day;
  • Monthly fund factsheets on MFG Core Series' website and on the securities exchange; and
  • The full portfolio on a quarterly basis with a delay period of no longer than two months on MFG Core Series' website and on the securities exchange.

The Fund targets a cash distribution yield of 4% per annum. The Target Cash Distribution will be paid semi-annually (for the periods ending 30 June and 31 December each year), with the actual amount for each period determined by using the average of the month-end NAV per Unit over the two year rolling period.

Magellan intends to pay a Target Cash Distribution of $0.07 per unit for the first four distribution periods, being the six month period ending 30 June 2021, 31 December 2021, 30 June 2022 and 31 December 2022.

You can exit the Fund either by making a withdrawal request to the Responsible Entity using a Withdrawal Form or by selling units on the Securities Exchange via your stockbroker or online broker. How you enter the Fund does not affect the method by which you can exit the Fund.

To make a withdrawal request with the Responsible Entity…
If you have a Securityholder Reference Number (SRN) or Investor Number
You will need to make a withdrawal request to the Unit Registry.
If you have a Holder Identification Number (HIN) with your stockbroker or online broker
You will need to convert your holding from your HIN with your stockbroker or online broker to an SRN issued by the unit registry.
This is a standard process which your stockbroker or online broker can assist you with.

 

 

To sell your units on the Securities Exchange….
If you have a Securityholder Reference Number (SRN) or Investor Number
You can provide your SRN to certain stockbrokers who can sell your units on your behalf.
If your stockbroker does not offer this service, you will need to ask your stockbroker to convert or transfer your holding onto a HIN.  This is a standard process which your stockbroker can assist you with. You can then instruct your stockbroker to sell your units on the Securities Exchange.
If you have a Holder Identification Number (HIN) with your stockbroker
You can instruct your stockbroker to sell your units on the Securities Exchange.


There are important differences between exiting the Fund via the Securities Exchange or by withdrawing directly with the Responsible Entity, including the price you will receive. You should read the PDS or consult with your financial adviser before making any decision on how to invest in the Fund.

Registry enquiries (Automic)

Automic Group

GPO Box 2629

Sydney NSW 2001

Emailmagellanfunds@automicgroup.com.au

Fax+61 2 8072 1409

Phone1300 408 792 (or +61 2 8072 1481)