Magellan touches the tip of a multi-billion dollar investor iceberg
New listed funds drew 12,000 first-time investors to Magellan and lifted funds under management to $40 billion.
Magellan Financial Group chief executive Hamish Douglass believes the fund manager has only scratched the surface of retail interest in global investing after new listed funds drew 12,000 first-time investors to the firm and lifted funds under management to $40 billion.
Mr Douglass, also Magellan’s co-founder and chief investment officer, said there was a potential retail fund pool of hundreds of billions of dollars in Australia for self-directed investors wanting international equities and infrastructure exposure, particularly while local share returns were subdued and interest rates low.
“Frankly we are touching the tip of the iceberg,’’ Mr Douglass said.
“That market is literally hundreds of billions of dollars and no institution has come up with an effective way (to tap it).’’
Magellan notched up $195 million of average monthly net retail inflows over the year, compared to an average of $120m a year earlier. Institutional inflows, which pay lower fees than the more lucrative retail market, were less rosy at a net $1.8bn for the year, down on last year’s $3.8bn.
Mr Douglass, who has a wealth of more than $500m, said the group now managed more than $12bn worth of Australian and New Zealand retail investors.
The strong inflows came despite the Magellan Global Fund portfolio returning a negative 0.1 per cent during the year. Over the past five years, the fund has returned an average 19 per cent, and an average of 10.6 per cent over the past decade. The Magellan Infrastructure Fund returned 17.8 per cent last year.
Magellan listed a global equity fund on the ASX in March last year that raised $637m and listed a global infrastructure fund using the same hybrid managed fund listed investment company model last month.It has struck deals to list mirror versions of its global fund with Westpac’s BT Financial Group*, AMP, and Colonial First State, which also offers their infrastructure fund, the only such offer on its platform.
At a time when many hedge funds are struggling amid market volatility and investors are wary of market investments, Magellan booked a 14 per cent lift in annual profit, reaching $198.4m for the year to the end of June.
Revenue soared 17 per cent to $333.8m, while funds under management ballooned 11 per cent over the year to $40.5bn during a time when many wary investors were pulling billions in cash from hedge funds.
Magellan, which employs more than 100 people, will pay a final 38c dividend, bringing the year’s total shareholder payout to 89.3c a share, a 19 per cent increase on the prior year.
Shares of Magellan rallied 7.2 per cent to $25.96.
The solid results for Magellan come at a time when savage market swings are making the outlook for fund managers grow dimmer as global central banks up-end value signals with ultra-low interest rates.
But Mr Douglass said there was a growing interest in international investment among Australians with the fading of long-term bullish conditions in the mining and banking industries that dominate Australia’s listed equites.
“People are saying the game has got tougher in a large part of the Australian market,’’ he said. “And, you know, we have been for a decade now educating about the types of investments that are available that aren’t really available in Australia.’’
*An earlier version of this article incorrectly stated that BT Investment Management had reached agreement to list mirror versions of Magellan’s global fund on its platform. It should instead have referred to BT Financial Group.
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout