The looming retirement of veteran stockpicker John Sevior from Magellan’s Airlie Funds Management has prompted two institutional investors to move their money elsewhere, sparking a $3 billion fall in its funds under management and a drop in Magellan shares.

Magellan on Wednesday revealed the outflows in an ASX announcement, saying the company had experienced $3.9 billion in net outflows last month, of which $500 million was retail investor money and $3.4 billion was institutional money.

Most of the outflows were from its Australian equities business Airlie, where funds under management (FUM) fell from $9 billion to $6 billion in the month.

The company said this was because two institutional clients had ended their mandates with Magellan following last month’s announcement that Sevior was retiring from funds management in June and handing the reins to long-time colleague Matt Williams.

One of the institutional clients that ended its mandate with Airlie was super fund HESTA, sources not authorised to speak publicly said.

Sevior, who founded Airlie before selling it to Magellan in 2018, is one of the best-known fund managers in Australia, and has long been a key manager for large industry super funds.

‘We must respect that clients can change their investment approaches and remain focused on executing for the vast pool of investors who remain with us.’

Magellan chief executive David George

Magellan chief executive David George said in an internal email to staff that Airlie had a well-planned succession strategy and the manager’s team had plans to expand, but he accepted the change.

“Ultimately, the transition put a decision point in front of a group of clients, and while some have stayed, others have moved on,” George wrote. “We must respect that clients can change their investment approaches and remain focused on executing for the vast pool of investors who remain with us.”