Investment trust Majedie has had a major makeover this year with new managers appointed by its board. Although it is far too early to assess whether the change will benefit shareholders, the new team at the helm – Marylebone Partners – have firm views on how the trust’s assets can be run to maximise long-term returns.
The change has resulted in a complete overhaul of the trust’s portfolio and a change of focus. Consequently, it is no longer classified as a global equity income fund, but a ‘flexible investment’ instead. This reflects its exposure to a mix of assets, not just equities.
For Marylebone, whose offices are a short walk from the splendid Wallace Collection in London, the appointment is a game changer – giving them a public profile they have never had before. For long-term shareholders, it offers the prospect of a rosier future. Over the past five years, the £113 million stock market listed trust has produced a meagre 1.1 per cent gain.
Marylebone, set up ten years ago by Dan Higgins, likes to do things differently. Its view is that if you look hard enough as a fund manager, investment opportunities and specialist experts can be found that will make investors long-term returns, irrespective of the prevailing economic conditions.
The result is an eclectic portfolio with little or no overlap in individual holdings – a bit like a jigsaw. ‘We want to give investors something different to the other investments they hold,’ says Higgins.
It now comprises three core elements – direct equity holdings, assets managed by specialist external fund groups, and one-off investment opportunities.
The equity holdings – a fifth of the trust – comprise 15 stocks, all profitable businesses, underpinned by good management. They fall into two silos – companies that have been successful for many years and show no signs of straying off their success path; and good businesses that are overlooked – or shunned – by other investors, but which should prove attractive long-term investments. UnitedHealth, a US healthcare provider, and UK listed Weir Group, sit in these respective camps.
The external managers – 13 in total – oversee more than 60 per cent of the fund’s assets. They are all experts in niche investment areas, ranging from Scandinavian equities (Keel Capital) to biotech specialist Paradigm BioCapital Partners.
The final part of the jigsaw supports shareholders in transforming an underperforming business – through ‘active engagement with management’. For example, it has recently backed US fund manager Engaged Capital in its quest to help restore the fortunes of US footwear and outdoor clothing company VF Corporation, owner of brands such as The North Face and Dickies.
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‘We only do these special investments if they come from a trusted source and can potentially provide us with annual returns of 20 per cent plus,’ says Higgins.
Marylebone has halved its management fees for this year as it reorganises the portfolio. From next year, they will total 0.9 per cent, although they could reduce slightly if the trust’s market value rises above £150 million.
‘Slowly, we are getting the message out about the fund, telling people how different it is to other investment trusts,’ says Higgins. ‘It’s a long-term proposition and we are determined to succeed.’
The market ticker is MAJE and its identification code 0555522. In the current financial year, it has paid two quarterly dividends of 1.8p a share with the shares valued at around £2.10.
The shares currently trade at a 12 per cent discount to the value of the underlying assets.
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