It turns out not everybody wants flash new overseas offices. And while funds aren’t sweating the constraints of Your Future, Your Super when it comes to private markets, some assets are just better handled in the public ones – illiquidity premium be damned.
Last year’s savage selloff hit ESG strategies hardest, but it hasn’t hit the appetite from big institutions. Their tastes have just become more discerning, with more stringent criteria for external manager selection.
Magellan’s $100 billion man hits the road
David George took the role at Magellan last year with no small goal: restore the fund manager’s faded fortunes and drag FUM back above the $100 billion mark from which it had collapsed following (and preceding) the departure of ‘rockstar’ CIO Hamish Douglass. To achieve that goal, George laid out an ambitious five year plan and promised to expand the product line-up to include more alternative strategies in the full knowledge that they – rather than equities – were the hot ticket back to institutional flows.
Magellan might still meander to the end of that five-year plan, but it’ll be without George at the helm: he’ll step down from the role, effective immediately, after slightly more than a year in it. Formica, a former chief executive of Janus Henderson and Jupiter Fund Management, will sit in the office on an interim basis as Magellan looks for a permanent replacement. Only recently appointed to the chairman role, Formica wrote last week that he was “deeply motivated to return Magellan to a growth footing” and that the investment house is “well-positioned for success”. What it apparently won’t do, per reports, is chase a pie-in-the-sky figure like $100 billion FUM.
“The board, in consultation with David, believes it is time to refocus leadership which will accelerate the progress made to date,” Formica said on Wednesday. “The board remains focused on the delivery of exceptional investment performance for our clients and are well positioned to continue to explore organic and inorganic growth opportunities.”
George was in many ways the polar opposite of Douglass, a more reserved presence at the top of Magellan and one – it was hoped – that would reassure shareholders and investors as FUM plummeted and performance faltered. George tightened the focus on the core funds management business, with ventures that weren’t a natural fit – including the FuturePay retirement product and an investment in fast food restaurateur Guzman Y Gomez – knifed or hawked off (Magellan retains a stake in start-up investment bank Barrenjoey).
“Magellan remains a great business and I have been proud to support our team in driving better investment and client outcomes,” George said. “I continue to believe Magellan has a bright future ahead.”
Formica is considered by some observers to be “a cut above most CEOs” in the funds management industry and has pursued acquisitive strategies at Henderson, its merged successor and Jupiter. As his first act as CEO he’s wiped away $7 million of debt held by Magellan staff as part of its controversial Employee Share Purchase Plan (ESPP) and promised to install a proper incentive framework.
“Magellan is focused on ensuring we retain, attract and appropriately incentivise our talent to drive performance excellence,” Formica said. “Addressing the ESPP loans for our employees so that they can remain focused on delivering for our clients and shareholders is an important part of this.”
At the most recent update, Magellan FUM stood at just $35 billion following equity market losses and pulled institutional mandates. Its shares sunk five per cent with news of George’s exit.
