Magellan Financial Group is staging a comeback, according to executive director, Andrew Formica, after a horror three-year period that saw total funds under management slashed by about two-thirds.
Formica told investors last week in the Magellan 2023/24 annual report that new flows “have continued to stablise in both retail and institutional channels, and we have secured significant client wins”.
“Particularly pleasing is seeing a return in the institutional channel, demonstrating the confidence new and existing clients retain in Magellan,” he said.
During the 12 months to June 30 the Magellan reported net outflows of A$5.9 billion across its suite of strategies with the majority (A$5.7 billion) exiting the flagship global equities portfolio: the global listed infrastructure fund lost a net A$0.5 billion via flows over the 12-month period while the Airlie Australian shares strategy provided some relief with net flow-growth of A$0.3 billion.
As at the end of June, Magellan held total assets of A$36.6 billion compared to more than A$113 billion at the same date in 2021.
The once high-flying manager – and a popular item in NZ financial adviser portfolios – experienced a run on funds and executives from the end of 2021 in the wake of performance issues and the exit of co-founder, Hamish Douglass.
Brought on last year as chair, Formica, the former head of Janus Henderson, quickly assumed an executive chair role with a brief to stem the rot.
The firm recorded an adjusted net profit of almost A$178 million for the 2024 financial period – a slight increase on the A$174 million result over the previous year despite a significant fall in management fees (A$258 million versus A$330 million plus in 2023).
Performance fees of A$19.2 million garnered as the global equities fund notched up a rare period of outperformance in the first six months of 2024 and other revenue (A$68.5 million) boosted the bottom-line.
The Magellan Global Fund returned 15.5 per cent for the six months to June 30 this year versus the benchmark 14.2 per cent but underperformed the index over the 12-month, three- and five-year periods.
But the still cashed-up funds management group embarked on an aggressive growth move announced last week, taking an almost 30 per cent stake in Australian quant specialist, Vinva Investment Management.
Magellan stumped up more than A$138 million for the almost one-third stake in the A$22 billion Vinva, led by the well-regarded Morry Waked.
“The Vinva team are experts in insight-driven systematic equity investing with significant intellectual property in their business, developed over decades of investing in global markets,” Formica said.
He told investors the manager was also gearing-up to expand it distribution range in the US and UK.
“While there is still work to be done, our financial strength, strong profitability and operating cashflows, have allowed us to pay attractive dividends and also invest for the future,” Formica said.
Sophia Rahmani, who quit another storied Australian boutique, Maple-Brown Abbot (now owned by Antipodes) earlier this year to take on the Magellan managing director role, would be promoted to chief executive within a few months, the annual report says.
Long-time Magellan independent director, Hamish McLennan, has also resigned as Cathy Kovacs and Deborah Page join the board.
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