Macquarie Global Infrastructure Total Return Fund is traded on the NYSE under the symbol MGU. It is a non-diversified closed end fund which was first launched in 2005 by The Macquarie Group, which is a successful Australian Bank specializing in the purchase, sale and financing of infrastructure entities.
Basically, the fund invests in toll roads, electric utilities, gas pipelines, airports, railroads, water systems and other such items throughout the world. Its five largest categories as as of November 30, 2010, consisted of the following:
Toll Roads - 20.5%
Electric Utilities - 17.8
Pipelines - 12.6
Seaports - 9.6
Transmission - 9.0
These investments are made globally with the largest concentrations in the following geographic areas:
United States - 21.3%
Australia - 15.0
France - 13.0
China - 8.9
United Kingdom - 7.6
The fund had as of November 30, 2010, approximately $334 million in gross assets of which approximately $100 million are borrowed funds to add leverage to the fund. The fund has borrowing facilities with BNP Paribas so that it can borrow up to one-third of the fund's assets after borrowings. In fiscal year 2010 the fund produced investment income of almost 3% but its turnover was fairly high and substantially above average at 85%. As of November 30, 2010, the fund still had tax loss carry forwards in excess of $76 million, which can be utilized against future gains.
I am a big fan of tax loss carry forwards as it gives you a tax free ride on future gains and is of true economic value. The net expense ratio has averaged in excess of 1.6% per annum but this is to be expected with a diverse global portfolio having average turnover of approximately 50%.
I am a fan of MGU when it can be purchased at the right discount because it offers exposure to a set of assets which cannot be readily replicated and of which the management company has true in-depth knowledge. Macquarie is a world premier adviser in the sale, purchase and financing of infrastructure assets which are critical to any nation's economy.
Disclosure: I am long MGU.