It’s been just under a year since David George assumed the role of chief executive officer and managing director (MD) at Magellan Financial Group after a tumultuous period for the fund manager.
With his sights set firmly on restoring growth, Mr George has been engrossed in developing a team that can take Magellan into the future.
Speaking on an upcoming episode of Relative Return, the new podcast by Momentum Media, Mr George explained that businesses when they grow become “more complicated”, subtly hinting at the need for new leadership once a business reaches a certain stage on its growth journey.
According to him, removing the “entrepreneurial attachments” has been key at the fund manager, at whose core Hamish Douglass, as one of its original founders, stood for years.
“It’s just really simplifying that focus to make sure that it had less entrepreneurial attachments and more focus on really making sure that we got the core bread and butter, sticking to our knitting work,” he continued.
“I think that was not particularly hard in this case. The team has been together a long time. They really understand the core investment philosophies that are in place across the business, and just helping to get that focus going was key.”
By stripping away layers of excessive research, Mr George explained that what he accomplished is an environment where everyone gets the “chance to speak and get their ideas out there on the table”.
Reflecting on periods in Magellan’s history, where the firm prioritised “deep research” across the board, including of companies “peripherally” on its radar, Mr George said what he wanted to do is to ensure team interactions happened more frequently.
“We wanted to just make sure that we weren’t overdoing it on things that weren’t as central and in the portfolio. That creates more space for new ideas and the discussions around those new ideas to move through,” Mr George said.
As part of this internal shift, Mr George added “formal monolithic big meetings” are a thing of the past. “More frequent meetings, shorter meetings, sharper meetings” are emblematic of the new Magellan.
“And then move that discussion out onto the floor around the desks between the portfolio managers and the analysts,” he said.
“So we made a few adjustments like that, and I’ve got to say that there’s a real embrace of that, number one, but it’s turning into more active discussions, and more frequent discussions, and perhaps a little less formality in that in terms of keeping it moving with a lot of energy, and it’s showing up in performance,” he added.
Having discussions “faster” has meant Magellan is now able to “triage where the work should go a little faster”.
“I think that’s important for keeping things fresh, but it’s also really important for engaging what is a really big team of really smart people. Bringing that discussion in a lively way actually improves the work environment, it improves the energy of the place, and not that it had to go from one place to the other, but you’re always trying to improve that. I think that’s having its effect,” he added.
Despite a fairly continuous bleed in funds under management, Mr George praised the team for the “ton of accomplishments” and “incredible capabilities that still exist” within the firm.
“It’s been an opportunity to join, look at the endowment of all of that that was created, and try to add some value around that, and take the set of capabilities and skills that exist here, which I’ve found even from the outside but, certainly having joined, I could see on the inside. The breadth and strength of the people, and how well they have built this entire business, not just investing because it’s so much more than just investing, but the depth of the teams across the group has been really impressive. And the culture and the real long-tenured group that know each other really well and have a great deal of trust,” he said.
“Being accepted into that has been a real pleasure as well.”
Drawing on his extensive experience, which encompassed observing a diverse range of investment managers, including his 14-year tenure at the Future Fund, Mr George admitted that his past has helped him map Magellan’s future.
In fact, upon joining, his focus was first on refining strategies.
“We’ve got a set of investment strategies. We’ve got a capability. We need to focus on that because if you don’t have all of your strategies working as well as they can with the right functioning parts and just working at the highest level, then you’re nowhere,” he said.
“So, the first piece has always been, make sure that our global strategy, our infrastructure strategy, and the Australian equity strategy, really, are working really well. They were in a lot of ways, but priority one was forming my own assessment, and it is a different lens that I bring and a different set of eyes,” Mr George noted.
Magellan’s flagship global fund returned 15.5 per cent over the first four months of 2023, outperforming its benchmark MSCI World NTR Index (AUD) by 3 percentage points.
However, its performance continues to lag on a longer-term basis, underperforming the benchmark by 7.8 percentage points over three years and 1.3 points over five years.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.