Magellan shares slump as funds under management slip further

Magellan shares have tumbled after the ailing investment manager’s latest update showed its funds under management had dropped by $3.6 billion in the last month, with the company slipping off the ASX 100 index.

With funds under management falling from $68.6 billion on April 29, to $65 billion on May 31, Magellan shares fell over 13 per cent to close the session at $12.85, as the company looks to find its feet after the sudden departure of its founder and star stock picker, Hamish Douglass.

Douglass resigned as chairman of the board in March in what has been a torrid year for Magellan. The turmoil, which started with the resignation of chief executive Brett Cairns, escalated with the company losing its largest investment mandate worth $23 billion after Douglass was forced to disclose his marriage separation.

Morningstar analyst Shaun Ler said investors are yet to be convinced about Magellan’s path to recovery.

“As long as you get negative press, or you get investors being panicked, or as long as there’s uncertainty about when Hamish will return, it’s hard to see the share price being able to reroute upwards, unless we get more certainty,” he said.

“A lot of the investors who put in money actually look at Hamish, I suspect they might be just holding off putting in money until they get some clarity on that point. He might come back, he might not come back, but in our view, it’s more likely than not that he can come back.”

The listed fund manager’s share price has fallen 70 per cent to $12.93 in the past year and the company appointed David George – the deputy chief investment officer of Future Fund – as the new chief executive in early May.

Magellan’s update to the ASX on Monday reported that retail funds under management fell from $24.8 billion to $23.6 billion, while institutional funds under management fell from $43.8 billion to $41.4 billion last month. Last year, funds under management peaked at $116 billion.

Mr Ler said Magellan’s exit from the ASX 100 had weighed heavily on the company’s share price on Monday, as it could lead to less demand for the stock from exchange-traded funds.