Magellan has announced its intention to transition its Magellan High Conviction Trust (MHH) from a listed investment company to an active exchange traded fund (ETF).
In a statement to the Australian Securities Exchange (ASX), Magellan said it hoped the move would reduce the trading discount on the trust.
Subject to unitholder and regulatory approval, unitholders would be able to apply for and redeem units directly with Magellan and had the ability to buy and sell units on the ASX at a tight spread to net asset value.
Brett Cairns, chief executive of Magellan Financial Group, said: “On balance, we believe the benefits for unitholders of reducing the trading discount in MHH outweighs the benefits of MHH remaining as a closed-ended fund.
“We believe transitioning the fund to an open-ended Active ETF is in the best interest of investors as it will allow direct access to the fund for applications and redemptions and see the units in the fund trade at a tight spread to net asset value going forward.”
The trust was recently selected by Wilson Asset Management for its Strategic Value trust which sought trusts trading at a discount to net asset value.