A turbulent time for Magellan
As Hamish Douglass takes leave from his chairman and chief investment officer roles at Magellan, Money Management explores an eventful period for the firm.
The firm has been hit by a series of problems, some directly involving Douglass, which has seen its share price fall and assets under management decline. Yesterday, Douglass announced he would take a leave of absence and his portfolio management duties would be taken over by Chris Mackay and former Magellan manager Nikki Thomas.
By the close of trading on 07 February, shares in Magellan were down 10.6% following the news of Douglass’ departure and were down 66% over one year compared to returns of 3.4% by the ASX 200.
Outflows had also hampered the firm with funds under management at 31 January, 2022 standing at $93.5 billion, down from $100.4 billion a year ago.
Magellan Global fund performance
The firm’s flagship fund has seen underperformance over the past year as Douglass’ investment style has been out of favour with markets. According to its most recent factsheet to 31 December, 2021, the fund had returned 19.3% over one year compared to 29.3% by the MSCI World index.
Douglass had said in the past that he was unconcerned by the underperformance as he was investing for the long term and, at the end of 2021, said the defensive assets in the fund’s portfolio would help investors this year if inflation began to rise.
SJP mandate loss
In December, wealth manager St James’ Place pulled a large institutional mandate. This was the firm’s largest mandate, accounting for 12% of its revenue and the loss led to a $23 billion reduction in the firm’s institutional funds under management.
CEO departure
Chief executive, Dr Brett Cairns, resigned from the firm in December after almost 15 years with the business. He was replaced by Kirsten Morton as interim chief executive while a permanent replacement was sought.
Douglass’ separation
The same week as Cairns’ departure, Magellan issued a statement to the Australian Securities Exchange (ASX) that he was separating from his wife. Reassuring shareholders, he said he and his wife had “no intention” to sell their stake in Magellan.
AUTHOR
Laura Dew
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