Fund Profile

Disclaimer

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.

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

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.

Analyst's 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
Continue to Portfolio

Fund History

17 Nov 2021 In good hands
Majedie Investments offers a potentially attractive solution for investors seeking a respite from the stresses of managing their own money in turbulent times…
01 Sep 2021 A bold take on global equities
Global equity investing is usually defined by either a ‘growth’ or ‘value’ approach but there are funds that blend these styles, offering a distinctive global equity investment…
08 Jul 2021 London Calling
UK equities represent a ‘once in a generation’ opportunity for investors according to the managers who joined us to discuss the outlook at our event last week…
16 Jun 2021 A better class of travel*
Sharing many features of a traditional family office, investment trusts offer ordinary investors a cost-effective solution to managing family wealth...
27 Apr 2021 The benefits of flexibility in a topsy turvy year
As markets fell into disarray over the course of 2020, the case for investing in a variety of styles was demonstrated. Trusts like Majedie Investments offer a broad perspective in a single package…
22 Apr 2021 Fund Analysis
MAJE’s performance has been strong in the reflationary rally, but its discount remains wide…..
10 Mar 2021 Spring Conference '21
Audio and presentations from 21 of the UK’s leading investment trust managers…
04 Mar 2021 Slides and Audio: Majedie Investments
Download the presentation and listen to the audio from our 'Ideas for your ISA' Spring Conference on 02 March...
28 Jan 2021 Slow and steady wins the race
We take a look at MAJE, a trust which has seen a significant turnaround in performance and has the potential to continue delivering income and growth in 2021…
10 Dec 2020 Results analysis: Majedie Investments plc
We examine the potential for MAJE if sentiment toward the UK improves in 2021…
25 Nov 2020 Britannia Redux?
UK equities have been despised for almost five years and could offer extreme rebound potential…
03 Sep 2020 Fund Analysis
Improving performance in 2020 and a historically wide discount that values the holding in MAM at zero leave MAJE in an interesting position.....
03 Sep 2020 Eating their cooking
Our analysis suggests that asset management businesses owned by the trusts they manage are on less demanding valuations than their listed equivalents...
16 Jul 2020 A turning point for investors
2020 could mark a turning point in the fortunes of traditional value versus growth investing...
27 May 2020 Results analysis: Majedie Investments
Majedie Investments (MAJE) released its interim results for the half year to 31 March 2020 this morning, including a major overhaul of its valuation methodology for funds business Majedie Asset Management…
09 Oct 2019 Backing Britain: Tapping two UK funds for the price of one
Majedie Investments gives investors access to two funds offering distinct exposure to the UK - both with clear positions with respect to Brexit...
12 Aug 2019 Fund Analysis
Majedie Investments (MAM) offers a solid income combined with a diversified allocation to a range of funds....
29 May 2019 A vintage blend
How Majedie Investments takes the heavy lifting out of diversification...
06 Feb 2019 Income for the long haul
With 'ISA season' looming we identify investment trusts which offer long-term, dependable income streams for yield-hungry investors...
06 Dec 2018 Results analysis: Majedie Investments
A brief review of Majedie investments 30 September final results, announced 5 December 2018...
22 Aug 2018 Reassuringly expensive?
Some investment trust premiums have been stretched to eye-watering levels. Have investors been enjoying themselves in the sun too much? We try to rationalise current levels and suggest alternatives...
23 Jul 2018 Fund Analysis
Majedie Investments aims to maximise total return whilst increasing dividends by more than the rate of inflation over the long term...
23 Mar 2018 Fund Analysis
Majedie Investments is a long-established and very broadly diversified investment trust which aims to maximise total return whilst increasing dividends...
07 Dec 2017 Fund Analysis
RESULTS: Dividends up by around 11% last year, and currently yields 3.5% - more than any other trust in its sector - but the discount remains wide...
01 Jun 2017 Fund Analysis
A very broadly diversified global equities trust which aims to maximise total return whilst increasing dividends ahead of inflation over the long term...
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