investor daily logo

Magellan’s recovery hits a roadblock in April

By Maja Garaca Djurdjevic
3 minute read

The fund manager’s recovery was halted in April after a promising streak lasting several months.

Troubled fund manager Magellan Financial Group has reported a dip in funds under management (FUM) following five consecutive monthly increases.

In an ASX statement, Magellan reported it had $36.3 billion in FUM as at 30 April, down from $37.3 billion at the end of March.

During April, Magellan’s retail FUM decreased from $17.8 billion to $17.1 billion, while its institutional FUM edged down to $19.2 billion from $19.5 billion.

The fund manager also confirmed flat net flows. Namely, in April, Magellan experienced net retail outflows of $0.2 billion and net institutional inflows of $0.2 billion.

Global equities FUM decreased from $16.2 billion to $15.6 billion. Meanwhile, infrastructure equities FUM ticked down from $15.6 billion to $15.4 billion while Australian equities FUM fell from $5.5 billion to $5.3 billion.

Magellan’s average FUM for the six months ended 31 December 2023 was $36.9 billion compared to $53.8 billion for the six months ended 31 December 2022.

Last month, the fund manager reported its fifth monthly increase in funds under management since January 2023.

In February, the firm announced several changes, including the appointment of Sophia Rahmani to the role of managing director of Magellan’s main operating subsidiary, Magellan Asset Management Limited, effective in May 2024.

Magellan’s executive chairman, Andrew Formica, said he will remain as the executive chair for an interim period to ensure the firm maintains continuity and stability, focusing his attention on Magellan’s strategic development, while Rahmani focuses on the firm’s funds management business.

“With a new executive leadership structure in place and a number of legacy issues behind us, including having addressed the Employee Share Purchase Plan loans and the uncertainty around our Magellan Global Fund (Closed Class) (MGF), I am confident the business is in a strong position to rebuild and grow,” Formica said.

In parallel with these “important” steps, Formica said Magellan has made progress on its strategic agenda, which includes a refocused US distribution platform and plans to launch a new product – the Magellan Unconstrained Fund – to retail investors.

Admitting that “more needs to be done” to restore Magellan’s former glory, Formica said the firm remains a “highly profitable business, with robust operating cash flows and significant financial strength in the form of our strong balance sheet”.

“I am encouraged by the progress we are making and am confident our strong foundations position us well to deliver positive outcomes for our clients and shareholders.”