Under new management: Majedie Investments

MAJE has seen a complete overhaul of its strategy under a new manager…by Nicholas Todd

Overview

The board of Majedie Investments (MAJE) undertook a review of the investment management arrangements, assisted by an external advisor, that resulted in the appointment of Marylebone Partners as the Investment Manager in January 2023. The strategy is focussed on offering investors a liquid endowment-like investment solution, which is unique in the investment trust universe and follows MAJE’s long-term fundamental investment focus.

As discussed inPortfolio, the strategy remains focussed on equities. However, the unrestricted approach allows the lead portfolio manager, Dan Higgins, to invest across multiple asset classes at his discretion. The approach remains focussed on the bottom-up, fundamental characteristics of each investment and the attractiveness of its valuations, rather than being driven by any macro-outlook or stylistic biases. Portfolio construction is centred around the team’s unique long-term target allocations to special investments, specialist external fund managers and public equities.

As discussed in Management, Dan works alongside fellow partners at Marylebone, Robert Elliott and Olivia Macdonald, whose combined experiences equip them with the required skill sets and access to an ideas network. This should offer a solution that has, historically, been hard to access for mass market investors. The trust has moved from the AIC Global Equity Income sector to the AIC Flexible Investment sector.

The long-term Performance of an equivalent strategy run by Marylebone Partners compares well to other multi-asset trusts within the sector. The evolution of the strategy will see MAJE target annualised total returns of CPI +4% over five-year rolling periods, which includes an annual Dividend calculated at 3% of NAV. As discussed in Charges, there is a management fee holiday for the first six months, with a new tiered management fee calculated in relation to MAJE’s market cap to align the managers’ interests with the trust’s shareholders, thereafter.

Analyst’s View

We believe that Marylebone Partners’ historical Performance track record suggests the strategy is likely to appeal to longer-term investors. The strategy’s diversified nature is expected to offer greater consistency throughout the market cycle, which is similar to what is provided by certain alternative multi-asset trusts within the Flexible sector.

The Management team’s unrestricted approach and significant experience managing such strategies provides them with a unique network of ideas, which we believe should provide investors with confidence around their unrestricted multi-asset approach and tactical allocation to special investments and boutique external fund managers, which we discuss in Portfolio. We believe that this strategic evolution means MAJE should offer unique and complementary exposure to the typically generic core equity solutions.

We believe the 3% of NAV annual Dividend payment and substantive revenue reserves may provide a useful and dependable source of income during periods of elevated market uncertainty or lacklustre growth. However, it is likely to be lower than under the previous strategy, with income making up less of the trust’s total return.

In our view, the new real return target of CPI+4% is an attractive objective and we believe that, if the managers can deliver good performance in line with their objectives, there is scope for the current Discount of 15.5% to narrow closer to that of other multi-asset strategies within the sector that trade close to par. We also believe that the new management fee, being charged on market capitalisation, creates an incentive for the manager to see the discount narrow.

Read the full research on MAJE here >
 

 
_{Disclosure – Non-Independent Marketing Communication. This is a non-independent marketing communication commissioned by Majedie Investments. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.}