Markets

Magellan shares sold into oblivion as assets more than halve in 12 months

Thu 06 Oct 22, 2:34pm (AEST)
Red plastic empty stadium seats
Source: iStock

Key Points

  • Magellan's funds under management fell -11.6% to $50.9bn in September
  • The flagship Magellan Global Fund is underperforming its benchmark across almost every time horizon

It's the dip that keeps on dipping. Magellan (ASX: MFG) shares hit another fresh eight year low as the company's monthly update flagged another sizeable outflow in funds under management.

September marked another -11.6% month-on-month decline in funds under management to $50.9bn. FUM is down -17% in the last quarter and -55.1% in the last twelve months.

The decline is unsurprising given the context of the broader market and bearish investor sentiment. However, further exacerbated by departure of co-founder Hamish Douglass in February and the ongoing underperformance of the company's flagship Global Fund.

The Magellan Global Fund, which accounts for approximately half of the company's asset base, is underperforming its benchmark - the MSCI World Total Return Index - on almost every time horizon.

Magellan Global Fund performance
Source: Magellan Financial

The fund is basically the Nasdaq with a few extra holdings from consumer discretionary and utilities sectors. It's top 5 holdings include (% of portfolio):

  • Microsoft 9.85%

  • Visa 7.65%

  • Mastercard 6.16%

  • Alphabet 5.64%

  • Yum Brands 5.53%

Oh and of course, there's a 1.35% per annum management fee.

Bottom picking?

Magellan shares are down -50.5% year-to-date and -85% from its all-time high on 14 February 2020, right before the pandemic selloff.

Peers like Platinum Asset Management (ASX: PTM) and Janus Henderson Group (ASX: JHG) have also posted some grim share price performances over the same time horizon.

Credit Suisse described Magellan's September quarter performance as underwhelming and expects outflows to continue. The investment bank said the overall sector was trading at a -30% discount to the market, but justified given the ongoing trend in outflows and broader market uncertainty.

Credit Suisse retained a neutral rating with a $11.40 target price.

MFG chart
Magellan share price chart

 

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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