Lonsec’s director of research in Australia, Peter Green, said retail outflows could also be related to the departure of Magellan’s star stock collector Hamish Douglass, who left office in February after he was forced to reveal his marital separation.
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Douglass took medical leave after a period of “intense pressure and concentration” in both his personal and professional life, but recently announced that he would become a Magellan consultant in October and not a permanent staff member. .
“We often highlight the key person’s risk, and in this case, I think it can be extrapolated that Hamish confirming his departure would have meant that individual advisors who had this relationship with him could withdraw investments.”
Since then, Magellan has appointed a new CEO, former Future Fund Deputy Chief Investment Officer David George, who will begin on July 19th.
Analysts said retail outflows could have been affected by changes in the ratings of some Magellan funds by research houses this year. Financial planners use the scores of research houses when advising clients and determining where to place their money.
“The problem Magellan faces is that even if its performance changes quite dramatically, the head of the research house may take a while to change his vision and start allocating again.” said Hugh Dive, chief investment officer of Atlas Funds Management.
“Also for the retail sector, financial advisors may be reluctant to include Magellan in their portfolios in the near future, as customers are likely to have read negative news about the fund manager in the press.”
Earlier this year, the Australian Financial Review reported that Zenith Investment Partners had cut ratings from five of Magellan’s global funds (Zenith on Friday did not comment on whether ratings had changed since then). At the same time, Morningstar downgraded Magellan’s global open-end class rating from gold to bronze, where it remains.
Lonsec also placed several Magellan global stock products in “background surveillance” earlier this year, but has since restored its ratings.