Magellan shares slump after $5.5 billion in outflows

Magellan Financial Group has suffered $5.5 billion in fund outflows since the start of the year, in a further blow to the troubled fund manager.

Shares in Magellan on Friday dropped 5 per cent to $18.03, after the company said its funds under management had fallen to $87.1 billion as at February 9, down from $93.5 billion at the end of January.

Magellan Financial Group chairman Hamish Mclennan.Credit:Oscar Colman

Magellan said the change was caused by market movements, cash distributions paid in January and outflows – as big investors take their money elsewhere.

There had been $5 billion in institutional outflows since January 1 and $500 million in retail outflows in that period, the company said.

The drop in funds under management comes after Magellan founder Hamish Douglass this week said he would take medical leave from the role of chairman and chief investment officer after a period of “intense pressure and focus” on both his personal and professional life.

Co-founder Chris Mackay has stepped in to oversee portfolio management at Magellan, which has come under pressure over underperformance of its global equities fund in recent years. Magellan director Hamish McLennan was this week appointed chairman in place of Mr Douglass.

Magellan has seen its share price collapse in recent months due to underperformance, the abrupt departure of a former CEO, and its biggest client pulling its funds.

Mr Douglass also disclosed last year that he had separated from his wife after concerns were raised that a divorce could affect the share price if the couple’s jointly-owned stake in the business was sold.

In the past six months, Magellan’s share price has dropped more than 60 per cent. Despite the fall in its share price on Friday, Magellan shares are higher than the lows reached on Monday, after rising by more than 5 per cent over the week.

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