NZ investors appear unfazed by the media squall breaking around Magellan across the Tasman, according the group’s head of distribution, Frank Casarotti.
Casarotti said the reaction from NZ investors has been muted following the shock resignation of Magellan CEO, Brett Cairns, last week and revelations of personal challenges facing founder, Hamish Douglass.
“We’ve had a few queries from NZ advisers but we haven’t seen any increase in fund redemptions,” he said. “Most advisers there understand that the news does not impact the Magellan investment strategy.”
Cairns quit last week for ‘personal reasons’ after a 14-year association with the Sydney-based global equities manager, replacing Douglass as CEO in 2019. However, Douglass remains as chief investment officer and chair of the now A$116 billion manager.
In the wake of Cairns’ departure, Hamish and Alexandra Douglass released a joint statement to the ASX confirming the couple had split several months before but had “no intention to sell any of our shares in Magellan Financial Group”: the pair own about 12 per cent of the ASX-listed firm.
Despite the distractions, Casarotti said Magellan continued to focus on its core investment management and client servicing duties.
“Importantly, Brett did not manage any money for Magellan,” he said. “So there’s no disruption to our investment process.”
Magellan chief financial officer, Kirsten Morton, has stepped in as interim CEO.
In the ASX statement, Hamish Douglass said: “Brett was instrumental in the development of Magellan’s exchange traded products and in the development of Magellan’s retirement product, FuturePay.”
However, the dual hit of relationship woes and the surprise exit of a chief executive have come amid ongoing performance pressures at the outlandishly successful funds management firm.
The growth-oriented Magellan has lagged benchmarks during the pandemic as its defensive stance proved out of kilter with the COVID-era markets boom.
According to the latest Melville Jessup Weaver (MJW) quarterly investment survey, Magellan sits at the bottom of the growth manager table over all periods up to 10 years to the end of September.
Casarotti said the recent Magellan underperformance was due to its cautious approach and an overweight to some China stocks – notably Tencent.
But he said most investors and advisers understood that the defensive slant of the Magellan portfolio should see it well-placed to weather any market drawdown.
Regardless of current relative underperformance, “we’ve still delivered annualised returns of about 12 per cent since inception,” Casarotti said.
Magellan has been a hit among retail investors and advisers in Australia and NZ over the last 10 years as well as developing substantial institutional support offshore.
As at the end of November, Magellan reported total funds under management of more than A$116 billion – up A$1.6 billion over the month as the sinking Australian dollar (down 5 cents versus the US currency during the 30-day period) cushioned the impact of any outflows.
Magellan shares closed up slightly last Friday at about A$29 after falling 10 per cent during the week and well off the 12-month high of A$57.