Magellan closed off the 2023 financial year with $39.7 billion in funds under management, down from $61.3 billion the previous year and $113.9 billion in 2021.

Magellan’s global equities fund, which accounts for more than half of its funds under management, saw outflows slow from $13.3 million to $4.8 million in the second half, as its performance improved. The global equities fund returned 20.6 per cent – below its benchmark of 22.4 per cent – over the year, but outperformed the benchmark in the six months to June.

Magellan also announced Fornica, a former funds management executive, as its new chairman on Thursday night, and on Friday it said George would no longer be chief investment officer as well as CEO.

Morningstar analyst Shaun Ler said Magellan’s update surprised the market, particularly its cost discipline.

“What impressed me was their ability to manage costs which came out much better than expected,” he said. “If you look at the consensus numbers, it was pretty bearish. I think the guided costs moving forward implies a huge step-up in earnings.”

Magellan posted funds management operating costs of $121.3 million in the 2023 financial year, which was below their previous guidance of $125 million to $130 million. It also gave lower cost guidance for the 2024 financial year of between $95 million and $100 million.

Loading

Magellan chief financial officer Kirsten Morton said those cost savings were partly expected to come as a result of savings from the company’s headcount which hadn’t been replaced following an organisational restructure in October.

Ler said while the company’s balance sheet was strong, Magellan’s ambition to return to $100 billion in funds under management, especially organically, by 2027 was unlikely to be realised.

“They could make very small acquisitions, but I personally don’t think their $100 billion target will be reached,” he said.

While George said it was hard to say exactly when funds under management would begin to grow again, he said he was confident that Magellan would reach its goal of $100 billion in funds under management.

“I’m confident that we can get there,” he said. “Exactly when funds grow is always about clients and those decisions. The things we can do, though, is ensure we’re executing and delivering performance and service with excellence. If we’re doing that, and we sustain that, then the turn around should come.”

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.