Fund manager Magellan is considering a conversion of the closed class units of its Magellan Global Fund into open ones.
In a note to the ASX, the firm said this decision has been taken in a bid to improve performance and narrow the trading price discount to its net asset value (NAV).
“The board of Magellan has determined to consider a conversion of the closed class units into open class units, as this should, if implemented, permanently address the trading discount to NAV per unit, while providing unitholders with a means to still transact on the securities exchange,” it wrote.
“Additionally, Magellan intends to continue to execute on the initiatives it has previously outlined that are value accretive and seek to deliver improved outcomes for unitholders.”
The Magellan Global Fund has returned 21 per cent over one year to 30 September versus returns of 22.4 per cent by the MSCI World Index.
However, it noted that a conversion of this kind raises complexities regarding legal, tax and regulatory matters, and any conversion will be subject to regulatory and member approval.
The firm said it expects to update fund members in the first half of 2024 subject to market conditions.
Magellan chief executive David George and new non-executive chair Andrew Formica have been vocal about their goals to improve the performance of the company and of its flagship Global Fund.
The firm, which has lost significant assets under management in the past two years, is targeting a return to $100 billion through rebuilding its track record, organic and inorganic growth.
This has already included a new energy transition investment strategy, the relaunch of the Magellan Core Series and a new Airlie Small Companies Fund.
Speaking earlier this month, Formica said: “The 2023 financial year was the first year of our five-year strategy to position Magellan for the next phase of its evolution from a founder-led business into a more diversified global fund manager of scale that, through the delivery of exceptional investment performance for our clients, seeks to deliver sustainable growth and attractive shareholder returns.
“In parallel with improving performance across our existing funds, we will leverage Magellan’s high-quality platform to deliver growth by expanding our offerings in ways that are additive and do not dilute Magellan’s existing strengths.”
