The Magellan Financial Group Ltd (ASX: MFG) share price has down 7% after the fund manager saw a massive outflow of funds.
Magellan manages three different strategies for investors – global shares, infrastructure shares and Australian shares.
March 2023 FUM sinks
Magellan announced its latest funds under management (FUM) movements for the month of March 2023. Prior to this update, it had been experiencing ongoing FUM as investors looked for safety or an alternative place to invest their money.
Sadly for Magellan, that trend has continued with a large withdrawal in March.
Total FUM dropped by $2.2 billion to $43.2 billion.
However, while its funds appear to have generated a positive return, the company experienced overall net outflows of $3.9 billion over the month of March. That’s bad news for the Magellan share price.
Those outflows included net retail outflows of $0.5 billion and net institutional outflows of $3.4 billion.
But, if you’re thinking that its global shares strategy suffered further FUM declines, you’d be surprisingly incorrect. The global shares FUM rose from $20.1 billion to $20.7 billion.
The infrastructure shares FUM increased by $0.2 billion from $16.3 billion to $16.5 billion.
It was the Australian shares strategy, called Airlie funds, that suffered the massive decline, dropped by $3 billion from $9 billion to $6 billion. Not only is $3 billion a huge fall, but it represented a third of the total Australian shares FUM. Ouch. According to the Australian Financial Review, it was superannuation fund HESTA that pulled its money, as well as an unnamed other fund.
It’s possibly a coincidence, but only last month we saw the retirement of the founder of Airlie, John Sevior. He’s one of the most respected investors in Australia, so his retirement is clearly a loss for the talent of the business.
What to make of this for the Magellan share price?
Clearly it’s not good news. The Australian shares segment had seen good performance of the FUM compared to the other two segments up until now. In percentage terms, this was a huge loss.
I’m not sure how integral Sevior about been to Airlie’s investing in recent times, but active investing is partly reliant on the investment team members.
Magellan’s outlook looks even less promising now. I don’t think I’d want to invest for the long-term in the fund manager. I’m not sure how it can regain its investment fund performance pizzazz, or what will attract investors to the funds for the long-term as well.
