Magellan will embark on a “considered” effort to recruit a new chief executive officer early this year following the shock exit of incumbent Brett Cairns in December 2021, according to founder of the A$95 billion Australian fund manager, Hamish Douglass.
In a video posted two days before Christmas, Douglass confirmed he would not step back into the CEO role he held prior to Cairns’ appointment about three years ago.
Magellan chief financial officer, Kirsten Morton, took over as interim CEO mid-December but Douglass said a formal recruitment process would begin soon.
Along with the departure of Cairns, the high-profile Australian global shares manager was hit by loss of its largest institutional client in December as well as media revelations across the Tasman about Douglass’ marriage breakdown.
However, he said in the video – designed to hose down the mounting pressure – that the series of “uncorrelated events” had no impact on the Magellan investment strategies.
Douglass denied press rumours of a looming “nasty divorce” while dismissing claims the separated couple planned to dump Magellan shares as “absurd”.
And despite losing an institutional mandate amounting to about A$23 billion after UK client St James Place dropped Magellan on December 20, he said the firm was well-placed.
“We have very substantial assets and cash and no debt,” Douglass said. “And we have one of the highest operating margins of any fund manager in the world.”
During the December quarter Magellan reported net outflows (excluding St James Place) of more than A$1.5 billion, covering just over A$1 billion of retail money and the remainder from institutional clients, according to an ASX release last week, with a further A$416 million of outflows due via distributions this month.
As at the end of December the group managed almost A$95.5 billion compared to over A$113 billion three months previously.
“Magellan is entitled to performance fees of approximately $11 million for the six months ended 31 December 2021,” the ASX statement says. “… Average base management fees are approximately 65 basis points (per annum) based on closing funds under management ($95.5 billion) as at 31 December 2021.”
While Magellan performance has lagged the broader global indices of late, Douglass stood by the firm’s dual objectives of growth and capital preservation.
“I’m not about to chop and change our investment strategy just because my ego has been bruised,” he said.
Douglass said the manager’s defensive stance hurt its relative performance during the extreme COVID-era bull equities run but the portfolio was positioned to hold up well should markets turn.
“There’s a lot of risk in these markets,” he said.
Inflation and the impact of the latest COVID omicron mutation top the risk list for 2022 to date, Douglass said, with the turn of events in the US key to any global outcomes.
Magellan is one of the most popular global equities managers among NZ financial advisers.