Magellan Global Fund and Company Update
An important part of profit generation for any funds management businesses is the amount of funds under management (FUM) it has. At 30 November 2021, Magellan had total FUM of $116.4 billion. On 20 December 2021, Magellan announced that it had lost the St James’ Place investment mandate, representing 12% of its annual revenue. The FUM had fallen to $93.5 billion at 31 January 2022.
Unusually, Magellan then released a mid-month FUM update. At 9 February 2022, FUM had dropped again to approximately $87.1 billion. This was a combination of market movements, cash distributions paid, net outflows and notifications since 1 January 2022. It has experienced net outflows of around $5.5 billion since 1 January 2022, including net institutional outflows of $5 billion.
Billions are flowing out of Magellan at the moment, which is hurting the Magellan share price. This does not however have any direct impact on the unit price of the Magellan International share funds into which our clients are invested.
Hamish Douglass was well-known as being the investment leader of Magellan. But Mr Douglass has now taken a medical leave of absence to prioritise his health after intense pressure and focus on both his professional and personal life including in the media. The Magellan share price fell after the announcement of this news.
Mr Chris Mackay, Magellan’s co-founder, inaugural chair and chief investment officer between 2006 to 2012, will oversee the portfolio management of Magellan’s global equity retail funds and global equity institutional mandates.
Magellan noted that Mr Mackay is a highly experienced and respected global equity portfolio manager, with a “very strong” long-term record of managing global equities. He has been the portfolio manager of MFF Capital Investments Ltd (ASX: MFF) since 2013. The funds management business also announced that Ms Nikki Thomas has rejoined the business as a co-portfolio manager. She originally joined Magellan in January 2008 and was involved in the global equity strategy since its inception in July 2007 to December 2017.
The share price of Magellan may continue to decline somewhat over the coming months due to funds outflow and Magellan may need to reduce the cost of their funds although they are denying this for now. This out would be positive for investors with lower fees. We think the people replacing Hamish running the funds at Magellan are of the highest quality and we will continue to monitor the fund over the coming weeks before making a decision regarding our client funds invested there.