It was announced last week that Stack would be leaving the fund manager after 18 years in July 2025. He is the lead portfolio manager on the firm’s four infrastructure funds and the head of investments.
Morningstar said Stack may not have the same public presence as co-founder Hamish Douglass who departed in 2022, but his exit can still prompt redemptions as around 75 per cent of the infrastructure funds under management (FUM) are held by institutional clients who are “less sticky” than retail or wholesale ones.
The funds will be led by four portfolio managers after Stack exits, all of whom already work on the fund, but the research house said it will take time for investors to gain confidence in this team without Stack as its lead.
Magellan is yet to announce who will take over from Stack as the investment head.
Shaun Ler, equity analyst at Morningstar, said: “We assume roughly $8 billion of one-off redemptions from the infrastructure strategy – around 50 per cent of infrastructure FUM and 22 per cent of group FUM – throughout fiscal year 2025–26.
“This assumption aligns with historical precedent, when the CEO and CIO departures in late 2021 and early 2022 led to massive redemptions. This resulted in a loss of over half of Magellan’s global equities FUM between November 2021 and March 2022.
“It will take time for clients and consultants to regain conviction in Magellan’s investment capabilities amid recent changes to its investment team. Accordingly, we see limited prospects for maintainable net inflows over the medium term.”
As a result of the predicted outflows, particularly from institutional infrastructure mandates, Morningstar forecast Magellan’s fund management pre-tax profits will reduce by 15 per cent per year through 2025–26.
Shares in the fund manager are down by 14 per cent since the start of 2025.
Earlier this month, the firm flagged Magellan could lose up to 11 per cent of its FUM per annum for the next five years. As of 31 December, FUM at Magellan is $38.6 billion.
