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Montgomery Global Equities Fund (MOGL) targets income and growth

Boutique Fund Manager Montgomery Investment Management has joined a small but growing group of fund managers to launch an Exchange Traded Managed Fund (ETMF). The Global Equities fund (MOGL) is currently raising seed capital. We take a brief look.

By ETF Watch - Dec 05, 2017

Boutique Fund Manager Montgomery Global Investrment Management has joined a small but growing group of fund managers to launch an Exchange Traded Managed Fund (ETMF). The Montgomery Global Equities Fund (MOGL) is due to begin trading on the ASX just before Christmas and is currently open to seed investors. The initial offer is open until 14 December 2017.

MOGL’s objective is to:

 provide investors with long term capital growth as well as income distributions of at least 4.5% p.a. through a portfolio of quality global shares and to outperform the MSCI World Net Total Return Index, in Australian Dollars over a rolling 5-year period, net of fees.

The fund will be listed as an Exchange Traded Managed Fund (ETMF), also known as an Actively Managed ETF. We took a look at ETMFs in a previous post so we won’t go into detail, but essentially the fund will be open ended (like an ETF) but actively managed (like a LIC or traditional managed fund). This gives investors the ability to buy units in the fund on the ASX at close to the exact Net Tangible Assets of the fund. The initial offer allows investors to purchase units without incurring brokerage costs.

What’s the investment approach?

MOGL will mirror Montgomery Global Investment Management’s unlisted managed fund, Montgomery Global Fund. Montgomery Global Fund has been active since July 2015 and boasts excess return beyond the benchmark of 3.18% per annum.

The investment strategy is to invest in a high conviction portfolio of 15 to 30 global businesses. Montgomery is a value investor applying ‘a highly disciplined and fact-based fundamental invesmtent process, which focuses on what Montgomery Global regards as high qualiy global businesses with attractive future prospects trading at attractive valuations’.

The fund can hold up to 50% in cash, but expects the practical maximum cash holding to be 30%. The fund targets no more than a 30% allocation to any specific sector or country, with the United States being the exception to this rule with a target allocation of up to 75%. The fund targets large cap companies with a valuation of at least $1 billion. The fund does not allow short selling and only limited use of derivatives.

Those interested more in MOGL’s investment approach may wish to read this interview with fund manager, Andrew Macken in the AFR (article behind a paywall).

What else exists in this space?

There’s been a number of high profile global equity LICs and ETMFs launched in recent times and investors are now blessed with a wealth of options. A quick look at the ETF Watch Fund Database shows 19 actively managed offerings in the global equity space. It’s great to see more options becoming available to investors, with each manager bringing their own set of convictions. With MOGL’s target 4.5% annual yield, this is likely to be a point of difference, with most global equity funds providing much lower income yields to investors.

For investors who do not want the added risk of the fund trading at large discounts or premiums to Net Asset Values, as is common with many LICs, MOGL will be one of just 5 Exchange Traded Managed Funds on the ASX, with the others owned by global equity behemoths, Magellan and Platinum and reasonably unknown K2 Global Equities.

Details of the offer

Montgomery Global Equities Fund is currently raising seed capital to get the fund going with the manager covering all costs of the listing. Investors interested in participating can do so here. This IPO is open until 14 December 2017, however, once the fund lists on the ASX, investors will be able to buy units on market through their broker under the ticker MOGL. Management costs for the fund are 1.32% p.a. with performance fees of 15.38% of outperformance beyond the benchmark, the MSCI World Net Total Return Index.


This post was prepared with publicly available information available from Montgomery Investment Management. ETF Watch did not receive any payment from Montgomery for this post, nor endorses the merits on the fund. We recommend investors seek professional financial advice before investing.

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