Magellan back above $100bn in funds under management, after Covid hit markets

Magellan has topped $100bn in funds under management for the first time since the Covid crisis sent markets into a tailspin.

Hamish Douglass, Magellan chairman and co-founder, photographed at their offices in Sydney. Britta Campion / The Australian

Magellan Financial has cracked $100bn in funds under management for the first time since the COVID-19 crisis sent markets into a tailspin earlier this year, with net inflows and a lift in global equities pushing it to $100.9bn by the end of August.

Both retail and institutional investors pumped a combined $566m into the listed fund manager over the month, with net retail inflows topping $208m and net institutional inflows coming in at $358m.

Alongside the net inflows, a lift in Magellan’s global equity holdings helped get its funds under management back to pre-COVID levels, up from July’s $98.5bn.

The Hamish Douglass-led fund manager clawed its way back over the $100bn mark over a five-month period, lifting its funds under management by just shy of $7bn between March and August.

That was after it lost close to the same amount in just a few weeks between late February and the end of March as markets were hit by fears of the pandemic and ensuing economic lockdowns.

Magellan last month announced a net profit after tax of $396.2m for the year to June 30, a 5 per cent increase from $376.9m a year earlier.

Its flagship Global Fund returned 9 per cent after fees for the year, beating the MSCI World index in Australian dollars by 4.2 per cent.

Magellan chief executive Brett Cairns said the fund manager had proved resilient in difficult market conditions.

“We had some outflows in March when things were really wobbly, but it wasn’t very much at all — something like $300m from a book of around $3bn — and that rebounded very quickly,” he said.

Magellan’s shares were among the hardest hit in the March market rout, plunging 60 per cent from top to bottom. While the share price has nearly doubled from its March lows, it remains 20 per cent below the all-time highs it reached in February.

Alongside its full-year result, Magellan also flagged the launch of its low-cost “MFG Core Series” funds, which will provide retail investors with more diversified, lower-cost portfolios of high-quality companies. It is aiming to have the MFG Core Series and Magellan Sustainable Fund available to investors by year’s end.

As markets march on despite the pandemic’s swift spread, Mr Douglass recently warned of the impact any false starts in vaccine trials could have on markets.

“There is still considerable uncertainty here if we are going to get to a timely vaccine to get us out of this through 2021 through vaccination. The market has put a much higher probability on that case than the scientific information guides you at the moment. The only thing that will guide us is the scientific data,’’ he told The Australian.

“If some of this is bad, the market could be well over its skis here. The economic outcomes are very different between it (the vaccine) working and not working.”

Even in the best-case vaccine scenario there was “a lot of uncertainty about what the real economy looks like once all the stimulus has been withdrawn,” he warned.

Magellan shares closed down 3c, or 0.5 per cent, at $58.49.