Magellan Financial Group’s funds under management (FUM) has declined for the ninth consecutive month, according to an update released to the ASX on Monday.
As at 31 October, Magellan had $34.3 billion in FUM, 2 per cent or approximately $700 million lower than a month earlier when this figure sat at $35.0 billion.
The fund manager reported net outflows of $0.8 billion during October, including net institutional outflows of $0.5 billion and net retail outflows of $0.3 billion.
This compared to the significant $2.0 billion of net outflows suffered in September, of which $1.7 billion was attributed to net institutional outflows.
During October, Magellan’s retail FUM dipped from $16.2 billion to $16.1 billion, while institutional FUM fell from $18.8 billion to $18.2 billion.
Global equities FUM moved from $15.3 billion to $15.2 billion, infrastructure equities FUM slid from $15.1 billion to $14.8 billion and Australian equities FUM dropped from $4.6 billion to $4.3 billion.
Magellan’s total FUM has fallen by almost 33 per cent over the past year and by more than 70 per cent over the past two years.
In a letter sent to shareholders in October, Magellan chairman Andrew Formica asserted that the troubled fund manager is still “well-positioned for success”.
But later in the month, Magellan confirmed that its chief executive officer and managing director David George was stepping down.
Mr Formica has taken on the role of executive chairman as Magellan searches for its next CEO. Mr George will remain available to assist with a handover until the end of the year.
“The board, in consultation with David, believe it is time to refocus leadership which will accelerate the progress made to date,” Mr Formica said last month.
“The board remains focused on the delivery of exceptional investment performance for our clients and are well positioned to continue to explore organic and inorganic growth opportunities. I am personally committed to the task of leading Magellan until such time that a new CEO can [be] appointed.”
Upon joining the fund manager last year, Mr George set his sights on restoring growth and unveiled an ambitious five-year plan for Magellan to be a fund manager of global scale once more with more than $100 billion in funds under management (FUM).
Following Mr George’s exit, Morningstar raised its forecasts for net outflows at the fund manager for the next financial year.
Morningstar equity analyst Shaun Ler described the departure as “unsettling”, with the research firm cutting its fair value estimate of Magellan’s share price and lowering its forecast for funds under management (FUM) over the longer term.
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
