Embattled Australian investment firm, Magellan Asset Management, reported another round of significant outflows over the June quarter while long-time head of sales, Frank Casarotti, also scheduled his departure.
In an ASX release last week, Magellan confirmed funds under management (FUM) had slumped about A$8.7 billion during the three months to June 30 as net outflows and tough markets saw the group finish the quarter on A$61.3 billion – almost half its all-time high of A$116 billion recorded only last December.
“For the June quarter, Magellan experienced net outflows of $5.2 billion, which comprised of net retail outflows of $1.7 billion and net institutional outflows of $3.5 billion,” the statement says.
The core Magellan global equities strategy copped most of the damage, falling from almost A$40 billion to A$33.3 billion by June 30 while the Australian shares business (run under the Airlie brand) shrunk about A$2 billion to close the quarter at A$7.9 billion: however, listed infrastructure assets remained steady just above A$20 billion during the three-month period.
Despite the change in fortunes, Magellan will book an A$11 million performance fee for the year to the end of June, the release says.
Magellan has been in repair mode through 2022 in the wake of a string of mandate losses (notably a A$23 billion portfolio managed on behalf of UK advisory firm, St James Place, last December). The group has also weathered the shock resignations of both chief executive officer, Brett Cairns, as well as chief investment officer (and co-founder), Hamish Douglass, over the previous six months or so.
And last week, veteran Magellan sales maestro, Frank Casarotti, flagged his exit from the business after 15 years in the role – albeit with an 18-month fade-out period.
Casarotti said in a statement: “This is a reflection of where I am at in life and wanting to spend more time with my family.
“This transition had been orderly and planned, and I will continue in the role for 18 months so I can support our new CEO David George and the broader team.
“I am very proud to have built such a strong distribution team with outstanding people. I am confident they won’t miss a beat after my eventual departure in December 2023.”
In particular, he has been instrumental in building the Magellan brand among financial advisers in Australia and NZ, with many adopting it as the go-to global equities solution. Magellan also has several wholesale mandates in NZ including as a manager on the Generate KiwiSaver global shares menu.
Before joining Magellan in 2007, Casarotti held a senior distribution position with another star manager, Colonial First State, which grew from about A$800 million to more than A$100 billion during his 14-year career with the firm.
Meanwhile, Douglass – who now consults to the firm he co-founded in 2006 – sold some Magellan shares last week in a move that saw his stake drop to about 11.6 per cent from almost 12.7 per cent previously.
Magellan shares closed at A$11.90 last Friday, down more than 8 per cent for the week.