Magellan exodus leaves funds more than halved in just a year

MAGELLAN Financial Group continues to bleed funds at a rapid rate, haemorrhaging a further $3.6bn in September as institutional and retail investors flee the money manager.

Magellan’s funds under management have now more than halved in the space of a year, dropping from $113bn at the end of September 2021, to the current $50.9bn.

Institutional outflows dominated the exits over the month, down $3.2bn, with retail investors pulling a further $400m in what analysts say is the more worrying trend.

Likewise, shareholders saw red on the latest outflows, pushing Magellan’s stock down 8.4 per cent to $10.75. In October last year, the stock was trading at $32.

Morningstar analyst Shaun Ler said he was not surprised institutional money was flowing out of the fund given the volatility in markets.

The retail money flowing out of the fund was more of a concern, he warned: “Seeing them redeeming consecutively, that tells us that people are moving on; they’re looking for alternatives.

“If we look at the entire equities asset class, there’s just been massive redemptions right across the world. Because of all the volatility, a lot of institutions are rebalancing their portfolios.

“In other words, some of these insto redemptions can be due to fundamental issues, but for some it’s really just due to this loss of risk appetite. And that component of those redemptions will come back, the flows will become positive again.”

Mr Ler recently slashed his fair value price on Magellan stock from $28 to $20 a share due to its subpar performance.

“Our prior thesis has not played out,” he wrote to clients.