Magellan has capped off a horror year with investors continuing to pull money out from the embattled fund manager, as it posted net outflows of more than $7 billion in the last three months of 2022.
The company’s share price fell by more than 9 per cent in the first hour of trade on Friday after the release of another bleak funds under management update.
December outflows at Magellan were $2.6 billion, comprising of $0.6 billion in retail and $2 billion in institutional net outflows. It comes after $2.5 billion in outflows in November and $2.4 billion in October.
Funds under management now sit at $45.3 billion, down from $50.2 billion at the end of November. In mid-2021, the firm boasted funds under management of $113.9 billion. Magellan’s share price has fallen more than 50 per cent in the past year.
The fund manager is trying to recover from a troubled 2022 during which it shed billions in funds under management as senior management, including high-profile stock picker and founder Hamish Douglass, left the company.
New chief executive David George has emphasised that they are working to win back clients’ trust and stem the outflows that have plagued the business for months by focusing on “keeping it simple” and returning to its roots as a conventional funds manager.
He aims to return funds under management to $100 billion in five years.
The latest update showed that average funds under management for the last six months of last year was $53.8 billion, compared to $112.7 billion for same period the year before.
Performance fees for the six months ended ending December 31 were “not meaningful”, the company said.
Magellan funds will pay distributions of $0.3 billion in January which will be reflected in next month’s funds under management figures.
The shaky end to 2022 comes after shareholders voted in favour of increasing fees for non-executive directors by $1 million at a meeting in December. The increased cap for non-executive director pay from $750,000 to $1.75 million is part of the company’s strategy to renew and expand the board.
Magellan aims to appoint two new non-executive directors to the board and wants to increase the fees of current directors Robert Fraser, Colette Garnsey, John Eales and chair Hamish McLennan.
Despite some pointed questions from shareholders, who asked why they should support the increase given Magellan’s share price has tumbled, the vote was comfortably passed with almost 95 per cent voting in favour of the resolution.
At the December meeting, the chair told shareholders that a lot of the outflows had been caused by the “instability of Hamish’s departure”.
“And there were a lot of institutional relationships that were tied to Hamish that, no matter what anyone could have said or done, I think was a difficult situation for the board to get their heads around,” he said.
Douglass, who split from his wife at the end of last year before announcing he was taking medical leave after “intense focus” on his personal and professional life, has returned to the firm as a consultant, not an employee.
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Source: Thanks smh.com