Majedie Investments

MAJE’s performance has been strong in the reflationary rally, but its discount remains wide…

Add to watchlist Request a meeting Download View key data

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.

Majedie Investments

Majedie Investments (MAJE) offers investors access to a multi-manager portfolio, with the underlying funds selected exclusively from those managed by Majedie Asset Management (MAM). MAJE currently blends four equity funds, combining a dedicated UK, global, global ex-US, and absolute return strategies. MAJE also owns a 17.2% stake in MAM which is unlisted.

MAJE has generated strong performance since Q2 2020, further increasing with the reflationary rally in Q4 . While its managers follow a flexible process to investing, at an aggregate level MAJE has a strong overweight to the UK and slight value tilt, which have both recently been beneficial despite having previously held the trust back relative to global peers. These factors, along with the write-down of MAM, caused MAJE’s underperformance against a global equity index and its peer group average over a five-year period.

In December 2020 MAJE moved from the AIC global sector into the AIC global equity income sector, to better reflect its income-generating capacity. Its current historic dividend yield of 4.8% is the highest in the global equity income sector, with MAJE having delivered 6.2% annualised dividend growth since MAM took over managing the trust in 2014. MAJE also has revenue reserve coverage of four times its dividend, one of the highest revenue reserves of any investment trust.

Over the fourth quarter of 2020, the board of MAJE streamlined the portfolio, reducing the number of funds from six to four. The trust retains its significant weighting to the UK, now at its highest levels in its recent history, with the managers believing the UK looks particularly attractive thanks to its vaccine-led recovery, successful negotiation of a Brexit deal, and attractive valuations.

Kepler View

MAJE was well-positioned for the rotation in global markets following the news that vaccines would be effective and has also benefitted from the board’s confidence in the UK. In our view, the current tilt to value (through its underweight to the US and exposure to the Tortoise Fund) and the UK should continue to be helpful if the reopening continues as planned. In particular, we note there is scope for the UK to do very well thanks to the reduction in Brexit uncertainty and the fast vaccine roll-out, which comes after its markets have sunk on to low starting valuations.

As a direct result of these tailwinds, we also believe that MAJE’s discount has the potential to narrow in the near to medium term. We believe its current discount is a reflection of its past underperformance, as well as a collection of unique factors which may dissipate over time. One of the more attractive features of MAJE continues to be its strong income potential, given its sector-leading dividend yield, which is another factor which could support the discount narrowing.

Thanks to its large weighting to the UK and its holding of the unlisted MAM, MAJE is highly active relative to its peer group and a global benchmark. It will likely underperform if the US market leads thanks to its structural underweight but offers investors a way to bet on the UK outperforming and at the same time enjoy a high dividend yield supported by exceptionally strong reserves.

Bull
Bear
Offers exposure to a UK economic recovery
Expensive structural debt is a drag on returns
Wide discount offers attractive entry point to a high pedigree boutique asset manager
Any deterioration in the UK’s outlook will disproportionately impact the trust
Highest yield in the sector with very strong revenue reserves
High ongoing charges relative to peers
David Johnson
David is an investment trust analyst and joined Kepler in September 2020. Prior to this he ran multi-asset model portfolios at a discretionary fund manager, and has worked in both asset management and investment banking during his career. He holds a Masters in Finance from the University of Warwick and is a CFA charterholder.

Fund History

Disclaimer

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm’s internal rules. A copy of the firm’s Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 9/10 Savile Row, London W1S 3PF with registered number OC334771.



Welcome to Kepler Trust Intelligence

Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority.
Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority. To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.