Magellan records net outflows of more than $5 billion

Markets

More than $5 billion has been ripped from Magellan’s funds as the embattled global equity manager reported more net outflows and another drop in its funds under management.

Magellan, one of the biggest fund managers in Australia, released an update to the ASX on Friday that showed funds under management had dropped from $70 billion in March to $61.3 billion at the end of June.

In June last year, the Sydney-based manager had amassed $114 billion in funds under management.

New Magellan CEO David George.

It reported net outflows of $5.2 billion, made up of $1.7 billion in net retail outflows and $3.5 billion in institutional outflows, the company said in a statement.

The company’s share price dropped by 5 per cent at the open of trade on Friday. Magellan’s share price has fallen 74 per cent in the past year.

The company said the change in funds under management in the June quarter was due to market movements, reflecting “recent volatility and foreign exchange”, and the net outflows.

Magellan said it was entitled to estimated performance fees of approximately $11 million for the year ending June 30. “Performance fees (if any) may fluctuate significantly from period to period,” the statement read.

The funds under management drop is another blow for Magellan after six months of turmoil, which began with the resignation of chief executive Brett Cairns at the end of 2021. The company then lost its largest investment mandate worth $23 billion after founder and star stockpicker Hamish Douglass was forced to disclose his marriage separation.

Douglass stepped down from his duties in February and took medical leave after a period of “intense pressure and focus” on both his personal and professional life, causing Magellan’s share price to plummet to new lows after months of turmoil.

The company has since appointed a new chief executive, former Future Fund deputy chief investment officer David George, who is due to start on July 19.

It also announced last month that Douglass will return to Magellan as a consultant and not a permanent member of staff.

The new consulting role will see Douglass placed on a one-year contract from October. He will not be actively picking stocks or have any governance or executive responsibilities, but will advise a number of clients and Magellan’s investment team on macroeconomic and geopolitical issues.

It was also announced last week that the company’s head of sales and distribution, Frank Casarotti, would retire in December 2023. The news that the 62-year-old, who has been with Magellan since 2007, was leaving led to shares slumping by 9.9 per cent.

Magellan’s share price tumbled in early June after its funds under management had dropped by $3.6 billion between April 29 and May 31, with the company slipping off the ASX 100 index.

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