Magellan Financial Group has revealed its funds under management fell $17.81 billion during the December quarter following the termination of its largest institutional mandate.
In a filing with the ASX, the firm reported $95.49 billion in funds under management as of the end of December last year, down from $113.30 billion in the previous quarter and $101.37 billion at the end of December 2020.
Excluding the termination of its $23 billion mandate with St James’s Place last month, net outflows of $1.55 billion were recorded during the December quarter including $1.09 billion from retail investors and $459 million from institutional investors.
Outflows for institutional investors included $256 million from global equities and $215 million from infrastructure equities, marginally offset by $12 million of inflows for Australian equities.
The firm said in December that the St James’s Place mandate represented approximately 12 per cent of its annual revenue and was expected to have a 6 per cent impact on revenue for the 2022 financial year.
The unexpected departure of CEO Brett Cairns has also presented a challenge for the firm.
Magellan’s shares have fallen almost 60 per cent over the past year, with Morningstar commenting late last year that it “firmly” believed the shares had been oversold.
“These near-term headwinds are bumps in the road, not nails in the coffin,” said Morningstar equity analyst Shaun Ler.
Magellan also announced that its base management fees for the final six months of 2021 were approximately 62 basis points per annum of the average of month-end FUM.
FUM averaged $112.7 billion during the six-month period compared to an average of $100.1 billion for the final six months of 2020.
“Magellan is entitled to performance fees of approximately $11 million for the six months ended 31 December 2021. Performance fees (if any) may fluctuate significantly from period to period,” the firm noted in its filing with the ASX.
Average base management fees were reported to be approximately 65 basis points per annum based on the $95.49 billion in FUM at the end of 2021.
Magellan said the run rate of base management fees based on closing FUM at the end of 2021 was “broadly in line year-on-year”.
