Ann: Funds Under Management and Performance Fees - December 2020, page-30

A few points i'd push back on.

1."at the end of the day Hamish read the markets wrong."

Did he? Or did he invest according to his mandate:

"Since Magellan was established, our investment goals have been consistent and straightforward: to provide our clients with satisfactory returns over the medium to long term while minimising the risk of permanent capital loss."

Let's compare this to say Ark Invest:

"Aims to provide broad exposure to disruptive innovation. ARK believes innovations centered around artificial intelligence, robotics, energy storage, DNA sequencing, and blockchain technology will change the way the world works and deliver outsized growth as industries transform."

You will not nothing about avoiding capital loss, only a focus on outsized returns. This gives us a bit of a clue of what we can expect from the manager and underlying funds.


2. "he was on the wrong side of the currency equation"

Magellan have unhedged and hedged units and only discretion on MHH. So for the majority of there funds, Hamish has no control of which side of the currency he is on. Obvious or not, it's the investors decision which units they take. Not Magellan's fault, except in MHH which is a fraction of FUM.

3. "the pull out of the markets is inexcusable, emotion driven investing imo"

You mean holding 15% cash is a pull out of the markets? Because I disagree, it's an investment allocation decision based on the adhering to their golden rule, "protecting investors from the risk of permanent capital loss". Something you need to understand about funds management is that it's not just about managing the money, it's also about marketing and communicating to investors about the funds. You must stay on script, investors like certainty in their managers.

4. "If they wanted to be defensive a smarter strategy would have been a currency hedge than moving to USD at a time of massive quantitive easing and 0%ish interest rates."

As discussed, they don't have that discretion across their funds. Only on MHH. It's your decision as an investor as to which class you want. Hedged or unhedged. These things tend to mean revert so while it's a headwind now it can just as easily be a tailwind again as Australia falls behind a booming U.S.