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Magellan’s swaying fortunes dampen FUM recovery in June

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By Jessica Penny
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3 minute read

Magellan Financial Group has reported a drop in funds under management (FUM) as the firm’s flows continue to fluctuate.

In an ASX statement, Magellan reported it had $36.6 billion in FUM as at 30 June, down from $36.7 billion at the end of May.

The fund manager confirmed that net flows were flat and comprised net retail outflows of $200 million and net institutional inflows of $200 million.

Namely, Magellan’s retail FUM edged up to $17.2 billion from $17.1 billion the month before, while its institutional FUM fell to $19.4 billion from $19.6 billion in June.

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Global equities FUM increased from $15.5 billion to $15.7 billion. Meanwhile, infrastructure equities FUM decreased from $15.8 billion to $15.5 billion while Australian equities FUM remained flat, at $5.4 billion month-on-month.

The FUM picture over the past year has been marked by instability, having reported a blip in May following a month of losses, which was preceded by five consecutive monthly increases.

This time last year, the fund manager had $39.7 billion in FUM, down from $41.4 billion in May 2023 – Magellan’s first time at sub-$40 billion in assets under management since April 2016.

While the firm has yet to crack $40 billion again, in its 1H24 results, Magellan cited the progress it was making in restoring corporate stability, resolving a number of legacy issues and gaining momentum on strategic priorities.

This included the appointment of Sophia Rahmani to the role of managing director of its main operating subsidiary, Magellan Asset Management Limited, effective from May.

Magellan’s executive chairman, Andrew Formica, said he would 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.

At the time, the board’s expectation was that Rahmani would be appointed as chief executive officer within the year, and Formica would revert to non-executive chairman at such a time.

“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.

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.”