Magellan assets plunge to $50.9 billion as institutions withdraw funds

Infrastructure represents a third of assets at $16.8 billion. The $8 billion in Australian equity funds managed by Airlie make up the rest of the funds.

The sharp drop in funds further highlights the challenge facing new chief executive David George. He joined the group in September after a series of high-profile departures, including that of co-founder and figurehead Hamish Douglass.

Mr George is due to provide shareholders with a strategic update this month and hopes for a turnaround in fund performance to stem outflows.

Overall pain

In late August, Magellan announced that its leading global fund lagged the broader stock market benchmark by 4.2% year on year, 7.2% annualized over three years and 2% over five years.

Magellan shares plunged 9% to $10.68, a new 52-week low in the first hour of trading Thursday.

Magellan shares have fallen 48% this calendar year and are 70% lower year-on-year as retail and institutional investors pulled money from its top global funds.

Assets under management have more than halved, from $117 billion in August 2021 to $60.2 billion.

But there is a positive point

Although the once high-flying Magellan was the hardest hit, it is by no means the only one as institutions around the world have reduced their equity exposure.

The trend of lower equity risk has been felt across the listed fund manager industry as their peers Platinum, Janus Henderson, T Rowe Price and Blackrock have fallen 30-45% this year.

A bright spot for Magellan is that the majority of redemptions come from institutional investors who pay lower fees than retail investors.

Currently, $19.8 billion of Magellan funds are managed on behalf of retail investors, representing 40% of the group’s total funds. A year ago, Magellan was managing $30 billion on behalf of retail investors, representing a quarter of its total funds under management.

By comparison, institutional funds under management fell 62% during this period, from $83.3 billion to $31.1 billion.

However, sentiment is weighing on Magellan’s ASX-listed closed-end funds. Currently, the $2 billion Magellan Global Fund is trading at a nearly 20% discount to net asset value as redemptions are underway.