Under-pressure ASX-listed fund manager, Magellan, has shed almost A$10 billion in a fortnight on the back of market volatility and a further spike in redemptions.
In an ASX note, Magellan says total funds under management (FUM) slumped to A$77.2 billion as at last Wednesday (February 23) from A$87.1 billion just two weeks prior.
“Magellan has experienced net outflows of approximately $3.2 billion since the most recent FUM update on 11 February 2022, which comprised net institutional outflows of $2.6 billion and net retail outflows of $0.6 billion,” the ASX note says. “In addition, since 11 February 2022, Magellan has received notifications of intention to redeem $2.6 billion, which has been reflected in the FUM figures.”
The recent outflows follow a managerial shake-up at the firm that saw co-founder and chief investment officer (CIO), Hamish Douglass, step down temporarily for health reasons earlier in February.
After a nine-year absence from Magellan, Chris Mackay, returned to the business he co-founded with Douglass in 2006 to oversee the group’s investments. Another Magellan alumni, Nikki Thomas, also rejoined the firm as co-portfolio manager.
All told, the manager has seen FUM decline by about a third from the peak of A$116 billion recorded late last year before cornerstone UK financial advisory client, St James Place (SJP), ended a long-standing global equities mandate amounting to A$23 billion.
Mackay told Magellan investors in a mid-February results briefing that the manager would stick by its investment strategy while working hard to retain clients.
“We’ll only be trusted if we deserve to be trusted,” Mackay said at the time. “In some cases, we must deserve to be trusted to rebuild trust.”
However, he said the firm expected to lose further institutional mandates. Magellan is mainly a retail success story in NZ but the firm has some large wholesale clients here including the Generate KiwiSaver scheme.
Institutional investors comprise just over two-thirds of total Magellan assets under management but only 38 per cent of fee revenue, according to the group’s latest annual report.
The report shows Magellan earned gross revenue of more than A$367 million for the 2021 calendar year, including A$350 million of base management fees and A$11.5 million in performance fees. Most of the performance fees came via the group’s global listed infrastructure fund with more than A$10 million paid by retail investors.
Magellan closed down more than 10 per cent last Friday (February 25) to almost A$17.8: the stock has traded between a range of about A$16 to A$21 since falling from about A$35 after losing the SJP mandate late in December.