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Magellan recovery slows amid persistent outflows

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By Maja Garaca Djurdjevic
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3 minute read

Although the fund manager continued to recover in March, the pace was slower compared to previous months.

Troubled fund manager Magellan Financial Group has reported its fifth monthly increase in funds under management (FUM) since January 2023.

In an ASX statement, Magellan reported that it had $37.3 billion in FUM as at 28 March, up from $37.2 billion at the end of February.

During March, Magellan’s retail FUM increased from $17.7 billion to $17.8 billion, while its institutional FUM remained at $19.5 billion.

But the fund manager also confirmed that outflows persisted over the month. Namely, in March, Magellan experienced net outflows of $0.7 billion, which included net retail outflows of $0.2 billion and net institutional outflows of $0.5 billion.

Global equities FUM decreased from $16.4 billion to $16.2 billion. Meanwhile, infrastructure equities FUM ticked up slightly from $15.5 billion to $15.6 billion, while Australian equities FUM lifted from $5.3 billion to $5.5 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.

In February, Magellan revealed its adjusted net profit after tax edged down 5 per cent in the first half of financial year 2024 to $93.5 million, following a 60 per cent drop a year earlier.

The firm also 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.”