Ann: Funds Under Management - February 2023, page-69

Magellan cut over persisting outflows at Macquarie


Retail fund outflows will continue at embattled Magellan Financial Group, but institutional withdrawals – an investor bugbear for more than a year – may be less material going forward, according to analysts at Macquarie.

The broker slashed its target price by 22 per cent to $7.50, from $9.60, with earnings revised lower for FY23, FY24 and about "12 per cent downgrades thereafter from updated Funds Under Management and increased outflow expectations".

Magellan's March FUM was $43.2bn – down $57bn, or 63 per cent, in less than three years. The group also posted a 60 per cent drop in half year profit just two months ago as internal management volatility and external market swings played havoc with its portfolio.

"We expect retail outflows to persist at current levels until we see sustained improvement in performance metrics," Macquarie says in its note to clients. "Institutional outflows are likely to be less material going forward (about $6bn-$7bn remain in Global Equities), with the most immediate risk being additional mandate losses from Aus Equities. We forecast about $2.9bn of outflows in the fourth quarter (Insto $1.5bn; Retail $1.4bn)."

Shares in the $1.4bn Magellan last traded at $7.69, down 53 per cent on year-ago prices.