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

Low Carbon Framework
Excludes companies with high exposure to decarbonization risks.
2

ESG portfolio exclusions
Excludes exposures considered detrimental to societies e.g. alcohol, tobacco retail and adult entertainment.
3

ESG business risk integration
ESG risks assessed for materiality & sustainability of business practices. Scores are forward looking, reviewed by the Investment Committee and actively monitored.
4

ESG portfolio construction integration
Direct integration of ESG scores in portfolio construction. Lower ESG risks receive a higher score and higher portfolio weighting.
5

Proxy Voting & Engagement
Explicit policy for Governance. Environmental & social outreach is company and issue specific.

Fund Facts

Portfolio manager

Elisa Di Marco

Structure

Global Equity Fund, A$ Unhedged

Fund size*

A$12.2 million

Chi-X Ticker

MCSE

ICE iNav**

AUD $

Solactive iNav

AUD $

More about iNAV

More information about iNav

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.

Magellan has engaged ICE Data Indices, LLC and Solactive AG as iNAV calculation agents to independently calculate and disseminate an iNAV. Both iNAVs are freely available to investors. From time to time there may be differences between the two iNAVs as a result of different calculation methodologies or timing of the data.

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 30 April 2021

** 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.

Research ratings ¹

Zenith

Recommended

See Research house ratings disclaimers

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 meet our nuanced Magellan proprietary ESG framework, which considers ESG risks and opportunities.
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.

Product universe: Our product universe

The thousands of available stocks are first filtered for size, liquidity and base exclusions such as fossil fuels & mining, controversial weapons, gambling and tobacco.

We next apply our proprietary low carbon framework AND ESG exclusions to reduce exposure to decarbonisation risk and companies that are more likely to have a detrimental impact on society.

The remaining stocks are then tested for an economic moat, resilience to disruption AND ESG risk assessment based on our proprietary research.

Only those stocks that qualify under these tests are considered for the next stage, scoring.

Next: Stock scoring
Stock scoring: Stock scoring

Rigorous fundamental analysis underlies 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, resilience to, or opportunities from, disruption and exposure to ESG risks and opportunities. Companies are then assessed for key risks including those related to debt, valuation and idiosyncratic event risk.

Each business is also scored on the basis of valuation, having regard to stock and industry specific considerations, including sustainable growth opportunities, returns on capital, cash generation, and other non-cash considerations. 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.

Next: Portfolio construction
Portfolio construction: Portfolio construction

These active portfolio construction inputs are then synthesised into a systematic portfolio management process where only the highest scoring companies are included in the portfolio.

The scores are used to determine portfolio weights, subject to consideration of geographic and industry exposure and specific risk assessment.

Stocks that are higher quality or have lower ESG risks receive higher scores, and are upweighted in the portfolio.

Next: Continuous monitoring
Continuous monitoring: Continuous monitoring

The portfolio is continuously monitored. Ongoing analysis of business fundamentals ensure our assessments remain robust, and key risk exposures remain acceptable.

Every quarter, each company within our universe is reassessed on the basis of its quality, disruption, ESG, valuation and key risks; creating revised active portfolio construction inputs which are used to rebalance the portfolio.

Back to beginning

Meet the Portfolio Manager

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

30 April 2021

Performance	3 Months	Since Inception** (%)
MFG Core ESG	11.82%	8.39%
Benchmark*	10.16%	9.40%
Out/Under Performance	1.66%	-1.01%

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

30 April 2021

Click here for further information on the benchmark.

31 March 2021

	% weight
LVMH Moet Hennessy Louis Vuitton	2.5%
Moody's Corporation	2.3%
Alphabet Inc	2.2%
Facebook Inc - Class A Shares	2.2%
Kering SA	2.2%

	% weight
Adobe Inc	2.2%
Yum! Brands Inc	2.2%
Alibaba Group Holding Ltd	2.2%
S&P Global Inc	2.1%
MSCI Inc	2.0%

Unit Prices

Date	Net Asset Value	Entry	Exit
06/05/2021	3.7482	3.7519	3.7445
05/05/2021	3.7349	3.7386	3.7312
04/05/2021	3.7678	3.7716	3.7640
03/05/2021	3.7776	3.7814	3.7738
30/04/2021	3.7914	3.7952	3.7876
29/04/2021	3.7959	3.7997	3.7921
28/04/2021	3.7677	3.7715	3.7639
27/04/2021	3.7708	3.7746	3.7670
26/04/2021	3.7532	3.7570	3.7494
23/04/2021	3.7988	3.8026	3.7950
22/04/2021	3.7698	3.7736	3.7660
21/04/2021	3.7605	3.7643	3.7567
20/04/2021	3.7357	3.7394	3.7320
19/04/2021	3.7466	3.7503	3.7429
16/04/2021	3.7789	3.7827	3.7751
15/04/2021	3.7505	3.7543	3.7467
14/04/2021	3.7271	3.7308	3.7234
13/04/2021	3.7770	3.7808	3.7732
12/04/2021	3.7679	3.7717	3.7641
09/04/2021	3.7547	3.7585	3.7509
08/04/2021	3.7309	3.7346	3.7272
07/04/2021	3.6950	3.6987	3.6913
06/04/2021	3.6899	3.6936	3.6862
01/04/2021	3.6612	3.6649	3.6575
31/03/2021	3.6077	3.6113	3.6041
30/03/2021	3.6061	3.6097	3.6025
29/03/2021	3.6084	3.6120	3.6048
26/03/2021	3.5982	3.6018	3.5946
25/03/2021	3.5644	3.5680	3.5608
24/03/2021	3.5447	3.5482	3.5412
23/03/2021	3.5356	3.5391	3.5321
22/03/2021	3.5076	3.5111	3.5041
19/03/2021	3.4883	3.4918	3.4848
18/03/2021	3.4775	3.4810	3.4740
17/03/2021	3.5557	3.5593	3.5521
16/03/2021	3.5358	3.5393	3.5323
15/03/2021	3.5384	3.5419	3.5349
12/03/2021	3.5087	3.5122	3.5052
11/03/2021	3.5113	3.5148	3.5078
10/03/2021	3.4918	3.4953	3.4883
09/03/2021	3.4778	3.4813	3.4743
08/03/2021	3.4420	3.4454	3.4386
05/03/2021	3.4572	3.4607	3.4537
04/03/2021	3.3660	3.3694	3.3626
03/03/2021	3.4018	3.4052	3.3984
02/03/2021	3.4396	3.4430	3.4362
01/03/2021	3.4705	3.4740	3.4670
26/02/2021	3.4273	3.4307	3.4239
25/02/2021	3.3657	3.3691	3.3623
24/02/2021	3.4297	3.4331	3.4263

3 ways to access MFG Core ESG Fund

Invest through the Chi-X securities exchange

Invest directly with the Fund

Speak to a Financial Adviser

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

View the indicative Net Asset Value (iNav)*

ICE iNav**

AUD $
Ticker details

Indicative NAV

Bloomberg MCSEAUIV INDEX

Thomson Reuters MCSEAUiv.P

IRESS MCSE-AUINAV.NGIF

Solactive iNav

AUD $
Ticker details

Indicative NAV

Bloomberg MCSGAIV

Thomson Reuters MCSEAUDINAV=SOLA

IRESS MCSEAUDINAV
Check the current share price MCSE
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

Additional information Financial Services Guide

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

Additional information Financial Services Guide

Log into the online portal via the link below to:

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.

Access online portal

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

ESG

01 Apr 2021
Stock story: Kering

Offering Gucci, Yves Saint Laurent and other luxury brands to the world.
ESG

01 Apr 2021
Stock story: Intercontinental Exchange

Using technology to make markets more efficient.
International Infrastructure ESG

26 Mar 2021
MFG Core Series Launch - Live Broadcast
Quiz - 1.50 CPD hours available

Vihari Ross, Head of the MFG Core Series, provides a look under the bonnet of the newly launched lower-cost global equity fund range, including why and how the Series was developed, as well as the investment process of her fund the Core International Fund. Portfolio Managers, Elisa Di Marco and David Costello provide insights into their respective funds, MFG Core ESG and MFG Core Infrastructure. The session concludes with Q&A. (Viewing time: 90 mins)
ESG

15 Dec 2020
Meet the Manager - MFG Core Series ESG

Elisa Di Marco, Portfolio Manager discusses the MFG Core ESG Fund. The Fund is 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.
ESG

15 Dec 2020
Stock story: PepsiCo

Big brands tackling the big ESG issues
ESG

15 Dec 2020
Stock story: Moody's

Rating debt the world over, for sustainability too.

FAQs

How do I invest in a MFG Core Series Fund?

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.

What is the Chi-X securities exchange?

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.

What is the minimum initial investment?

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.

What disclosures are provided for the MFG Core Series funds?

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.

What is the Fund's distribution policy?

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.

How do I withdraw my investment in the Fund?

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.

How do I contact the Unit Registry?

Registry enquiries (Automic)

Automic Group

GPO Box 2629

Sydney NSW 2001

Email: magellanfunds@automicgroup.com.au

Fax: +61 2 8072 1409

Phone: 1300 408 792 (or +61 2 8072 1481)

	Units
Bloomberg	MCSE AU EQUITY
Thomson Reuters	MCSE.CHA
IRESS	MCSE .CXA

	Indicative NAV
Bloomberg	MCSEAUIV INDEX
Thomson Reuters	MCSEAUiv.P
IRESS	MCSE-AUINAV.NGIF

	Indicative NAV
Bloomberg	MCSGAIV
Thomson Reuters	MCSEAUDINAV=SOLA
IRESS	MCSEAUDINAV

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

Fund overview

Why ESG?

Investment objective

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

Our ESG risk assessment process

Fund Facts

Research ratings 1

Portfolio Construction

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

Our product universe

Stock scoring

Portfolio construction

Continuous monitoring

Meet the Portfolio Manager

Elisa Di Marco

Portfolio Manager

Performance

Unit Prices

3 ways to access MFG Core ESG Fund

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

Additional information and forms

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

Additional information and forms

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

Investment Insights

Stock story: Kering

Stock story: Intercontinental Exchange

MFG Core Series Launch - Live Broadcast

Meet the Manager - MFG Core Series ESG

Stock story: PepsiCo

Stock story: Moody's

FAQs

Research ratings ¹