Magellan lays out plan to regain global standing

Speaking at the firm’s annual general meeting on Thursday, chief executive David George said Magellan will be a fund manager of global scale once more with over $100 billion of funds under management after five years.

This will be quite a feat for the embattled firm given its FUM more than halved to $50.9 billion as of the end of September from $113.3 billion at the same time last year.

But Mr George, who was appointed to the role of chief investment officer on Monday, believes in the firm’s capabilities to recapture its once glorified status.

“This will not be growth for the sake of growth,” Mr George said.

“It will be considered growth, driven by creating long-term shareholder value.”

According to Mr George, Magellan has a “strong balance sheet and capacity to execute” its five-year plan. The firm, he assured, doesn’t plan to shelve its existing on-market buyback programme and dividend payments.

“This growth will also be more diversified, as we expand our range of capabilities, we will be less dependent on our global equities business,” Mr George said.

In order to meet its goals, Magellan plans to look to leading indicators and market trends and to take signal from its clients.

“We will invest in our relationships to maintain our position as a partner of choice for the Australian wealth industry, maintaining and growing the well of commitment and support from our adviser partners,” Mr George said.

“We will invest in ensuring that we can bring our more diverse offerings to global institutions and create value-added partnerships that sustain in a competitive environment.

“This strategy, and a continued focus on how we deliver performance in every area, will be the ultimate driver of attractive returns for our shareholders.”

While taking on the role of CIO, Mr George is also the firm’s chief executive officer and managing director.

Mr George assumed direct responsibility for Magellan’s investment functions in July 2022 and, according to the firm’s listing on Monday, “his appointment as CIO formalises those responsibilities”.

While being directly responsible for Magellan’s investment functions, Mr George will also oversee Hamish Douglass’ new role with the business of an external consultant.

In a separate address to the annual general meeting, Magellan's chairman, Hamish McLennan, said Mr George will ensure Mr Douglass’ role “supports investment and client outcomes and continues to benefit Magellan”.

The departure of Mr Douglass from Magellan in February this year over health reasons sparked major turmoil at the firm with gossip rife as to the real reason behind his abrupt disappearance from public eye, which ultimately led to dented investor confidence.

At the time, the firm expressed its “wholehearted” support for Mr Douglass.

“The board wholeheartedly supports Hamish’s decision to prioritise his health and Magellan is committed to providing him the time and support he requires,” Mr McLennan said.

A few months later, it was revealed that Mr Douglass would resign from the Magellan board, before the firm confirmed that from 1 October it would pay him $400,000 per annum for consultancy services.

At the time, the fund manager said: “Mr Douglass will provide valuable investment insights to the businesses”.

Magellan’s plans for 2023

Over the coming year, Magellan plans to expand its distribution team, particularly in Europe and the US, and “deepen the specialist product capability to support a wider range of product”.

The firm also announced that “activity for this year will be done within the existing platform and team”.

“Part of near-term growth will come from the redirected efforts toward the Core Series and the launch of the Energy Transition strategy. We will also embed the outstanding capability within ESG we have developed and refined over the 15 years deeper, across all client solutions and the organisation. My key focus as CIO is to improve performance,” Mr George said.

In closing, he added that his focus “is on fixing performance and positioning Magellan to grow”.

And Mr McLennan has no doubt Mr George will be “an excellent leader for the next chapter”, telling the firm’s shareholders that he has the “full support” of the board.

Moreover, the chairman confirmed that the board is searching for two additional non-executive directors, its focus being on “ensuring board diversity and the requisite skill set mix” required to support its future strategy.