Magellan shares drop as investors grill board on FUM, revenue
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More news: Magellan Financial Group is struggling to get back onto fund manager recommended lists, with its funds under management continuing to suffer as superannuation funds and financial services firms consolidate.
Magellan’s shares fell 1.62% by 2:03pm AEDT to $11.26. Despite a 76.02% surge over the past 12 months, the current share price remains well below its peak of $67.27 in January 2020.
Magellan chair Andrew Formica was asked by a shareholder why the fund manager continued to lose funds under management and revenue.
Formica said that the company was still feeling the effects of departures and changes in its senior investment leadership team, particularly on the global equity side of the business.
He noted that this led platforms to put Magellan funds “on hold,” preventing new investments in the funds while allowing redemptions.
“We've been able to address that, and a number of platforms have now reversed those decisions and put us back onto those,” Formica said.
“We were on a lot of recommended lists … once we were removed from those recommended lists, which meant that other managers were put in place of us, it's now hard to get back on those.
“... It's a key priority for us, but that's been a challenge that we've had to overcome.”
Formica also noted that Airlie co-founder John Sevior’s departure in 2023 resulted in a decline in assets under management.
“Thankfully, the team and the processes in place have been very solid and continue to deliver exceptional results to clients, and we've been able to restore that and grow those assets and they have a very strong path forward,” he said.
“We're now … approaching three years since those leadership changes in the investment teams, we've been able to demonstrate how well the investment process being continually invested. That's starting to resonate, but it just takes time, and unfortunately, that's the nature of that game.”
Formica also note that the company’s revenue had been impacted by consolidation in the financial services industry, particularly among super funds and adviser networks.
As these entities consolidated, they sought to reduce the number of fund managers they used — often at lower fees.
“That's just part and parcel of the nature of the industry … We need to keep focusing on our efficient platform, so that we continue to take costs out of the business and to be able to run very efficiently, because we will continue to see pressure on that top line through the revenue we receive for the services we provide,” he said.
Magellan eyes US as key growth market
The news: Investment manager Magellan Financial Group is eyeing the US as a key growth market as outflows slow and funds under management (FUM) stabilise.
The numbers: Managing director Sophia Rahmani highlighted the group’s FUM of $38 billion as at 30 September, noting that it was well-balanced across asset classes and distribution channels.
Magellan shares are down 0.5% at $11.39 in early trading on the ASX.
The context: Rahmani will tell shareholders at the company’s annual general meeting today that institutional client flows are trending in the right direction, with positive net flows of $0.6 billion in Q4 FY24 and $0.8 billion in Q1 FY25.
She will also emphasise that internationally, the fund manager views the US as a key growth market due to its size and scale.
The group said Rahmani will be appointed CEO within six months, after which chair Andrew Formica will return to a non-executive role.
Deborah Page will be appointed deputy chair at the conclusion of today’s AGM, while non-executive director Hamish McLennan will retire after nine years. The board expects to appoint a new non-executive director in the second half of 2025.
Magellan, which faced a large protest vote against its remuneration report last year, said it had incorporated feedback to design a new equity-based remuneration framework for key management personnel and senior executives, announced in August. The framework includes specific financial and non-financial measures aligned with its strategy and values.
What they said: “Internationally we see the US as a key growth market given its size and scale. We are well-placed to strategically leverage and capitalise on our existing distribution infrastructure to penetrate this large market across retail and institutional channels,” Rahmani will say in her AGM address.
"We are also actively exploring opportunities to deploy capital into expanding the platform’s capabilities further, particularly in the retail market."
The source: ASX announcement
