Morningstar remains upbeat about Australian-based global equities manager Magellan despite a recent spate of senior staff exits including the departure last week of head of research, Nikki Thomas.
As well as Thomas, a 10-year Magellan veteran, the manager has seen head of macro research, Sam Churchill, and head of healthcare, Ted Alexander, leave since this November.
“Taken together, these changes warrant further analysis, given such a high level of turnover has occurred in a short period of time,” Morningstar says. “However, the implications for the core Magellan Global Equities strategies are limited, given lead portfolio manager Hamish Douglass remains firmly at the helm, and the investment team remains experienced and well-resourced.”
The research house says Thomas left after Magellan axed its international (ex US) strategy – seeded only this August. While Morningstar says the call was “surprising” it enables Magellan to refocus on core strategies.
“We take this decision as an example of Magellan putting existing investors’ interests ahead of the desire for future growth in FUM, which we applaud,” the research house says. “Magellan will continue to develop the Low Carbon Global Equities and Low Carbon US strategies given their closer alignment with the core strategies.”
Alexander’s resignation in November also sparked a restructure of the indifferently-performing Magellan healthcare team – now subsumed under a ‘Franchise and Healthcare’ unit – with two analysts cut.
“Given the limited exposure the Magellan strategies had in healthcare names, we do not consider this change material, and we respect Magellan’s candor in admitting they are unable to generate an investment edge within the biotech and pharmaceutical sectors,” Morningstar says.
Meanwhile, the Brisbane-based Churchill resigned in November after Magellan relocated the macro-research function to Sydney. Arvid Streimann, previously financials senior analyst, assumed Churchill’s duties last month.
“We are currently in the process of undertaking a formal review of the Magellan strategies and will be publishing our updated view over the coming months,” Morningstar says.
As at the end of November, the ASX-listed Magellan reported funds under management of over A$58.5 billion, including about A$18.2 billion sourced from retail clients. It is understood the manager has sourced well over a $1 billion from NZ investors.
“In November, Magellan experienced net flows of $717 million, which included net retail outflows from global equities strategies of $20 million, net retail inflows into infrastructure equities of $43 million, and net institutional inflows of $694 million,” the manager told the ASX last week.
Magellan was up A$1.55 over the week to close at A$26.7 on Friday, slightly down from the Wednesday peak of A$27.05.