Embattled investment manager Magellan may be forced to slash management fees as it faces a tough trade-off between the interests of unitholders in its underperforming funds and shareholders reeling fromShares in Magellan Financial Group recovered slightly on Tuesday, rising 4.4 per cent to $20.56, following a dramatic 30 per cent plunge on Monday after confirming British wealth manager St James’s Place had terminated its $22 billion contract.
The adviser received nine phone calls from clients concerned about Magellan’s share price rout, the unexplained departure of long-serving chief executive Brett Cairns and fears that“The board made a big mistake not explaining Brett’s departure, it was a botch job,” said the adviser who described himself as “not loyal to Magellan but to their process” and asked not to be identified.
Magellan declined to comment, but sources with knowledge of internal memos said the management team was emphasising “no kneejerk reactions” in response to the St James’s Place mandate loss, making any imminent changes to rate cards unlikely. Magellan’s average base fee margin was 0.61 percentage points in 2021, reflecting the blend of both institutional and retail funds.Magellan’s flagship Global Fund, however, charges a base fee of 1.35 per cent plus a performance fee. That, CLSA says, is higher than Platinum, which charges 1.1 per cent under its performance fee, and GQG, which charges 0.75 per cent, albeit as a wholesale fund.
Morgan Stanley’s Andrei Stadnik dropped his price target to $17.50 late on Monday as Magellan was still lagging its benchmarks and risked further outflows as 70 per cent of the remaining assets under management were from institutional client that were largely outside of Australia.
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