Magellan moves away from global equity dominance

Magellan Financial Group is actively trying to reduce the dominance of its global equities business as it makes investments in external businesses via its Magellan Capital Partners division.

In a webcast related to its full-year results, the firm said, while it understood investors’ focus on the performance of the Magellan Global fund, this was a key focus of the “current” business and it wanted to avoid being “solely a global equities business”.

Hamish Douglass, Magellan chair, said: “We don’t want to be solely a global equities business, we have an infrastructure business and are on our way to having the best Australian equities business in the country [in Airlie].

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“We also have the Core series, our sustainable funds – where we are expecting to have institutional mandates in the next few months – and FuturePay which has the potential to be a meaningful part of the business.”

The other major part of the business was its investment via its Magellan Capital Partners division in Barrenjoey, Finclear and restaurant Guzman y Gomez, which was separate from its fund management business. It was “early days” for these investments as they were currently incurring start-up costs but Douglass said the firm was backing them for the long-term.

“In three to five years time, these companies will look like smart investments and people will be asking ‘how did they get them?’, they are performing ahead of our expectations, it’s about the value creation,” Douglass said.

Meanwhile, the firm said performance fees had fallen significantly from $81 million to $30.1 million due to fund underperformance.

Some 65% of its total expenses related to expenses for its 135 employees ($70.4 million), although this had fallen from $73.8 million in 2020 as a result of the lack of the travel caused by the pandemic plus salary reviews.




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Magellan seems to be morphing from a specialist boutique with a differentiated style, into a broad based, direct to the public, high fee, index hugger.

Hamish frolicking with a bevy of beauties and an obese James Packer on Packer's luxury yacht in the South of France in the middle of a pandemic, must surely be Magellan's "jumping the shark" moment.

@ Anon,
When you have over $14B under management, in my book, you cease to be considered a boutique fund manager.

In fact like most managed funds, size does matter because you ceased to be nimble enough to move when things go wrong because you are so big that any sudden or sizeable change in direction usually results in market under performance and the value of the fund.
A bit like water skiing behind the QE2

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