Magellan has biggest drop in FUM for 2023 to hit nine-year low

The embattled group records its biggest monthly drop in funds under management this year as it attempts to return funds to $100bn by 2027.

Embattled fund manager Magellan’s targeted return to $100bn in funds under management by 2027 has hit a hurdle after it revealed its biggest monthly drop in funds this year.

Funds under management are now at a near nine-year low after declining by $4bn throughout September to $35bn.

There was no mention of a big loss of mandate, but the last time Magellan reported such a big fall was in December 2022, when FUM sank by nearly $5bn.

Magellan’s FUM is now at its lowest since $35.3bn in February 2015. Shares in Magellan dived 18.5 per cent on the news to its lowest close since May 2013 of $7.18 on Friday.

Magellan experienced net outflows of $2bn in September, which included net retail outflows of $300m and net institutional outflows of $1.7bn, it told investors on Friday.

Between January 1 and September 30 this year, Magellan’s funds has under management have shrunk by 22 per cent -- including decisions by Hostplus and HESTA to pull multi-billion mandates with the group’s equities manager Airlie.

September’s retreat in FUM came in what was a disruptive month for markets with the S&P/ASX 200 index down 2.8 per cent and the S&P 500 off 4.9 per cent as investors mulled the outlook for interest rates, prospects for global growth and China’s economy against a surge in oil prices.

In August, Magellan posted a worse-than-expected 52 per cent drop in full year profit to $182.7m on the back of continued fund outflows.

Magellan chief executive and managing director David George told The Australian following those results that it was still possible to achieve its target of $100bn by 2027 despite the continued slide in the opposite direction, but admitted it may need to come through acquisitions of rival firms or teams.

“It’s always been a long-term strategy so we’ve got the first piece being making sure the current strategies are working, we started on the second leg which is looking where we can build our current capabilities in an organic way, so we’ve launched two strategies and relaunched the Core Series, and then other pieces that are in organic,” Mr George said.

“To get to $100bn that’s probably part of it.”

Magellan recently appointed board member Andrew Formica as its new chairman with Hamish McLennan to step back to deputy.