The Magellan Financial Group Ltd (ASX: MFG) share price will be on watch today after the funds management firm announced the resignation of Chief Executive Officer (CEO) Brett Cairns overnight.
It’s been a turbulent year for the Magellan share price, sinking 41% over 2021.
MFG share price
End to 14-years of service
Magellan cited personal reasons for Mr Cairns exit.
Current Chief Financial Officer (CFO) Kirsten Morton, who has been the Magellan for eight years, will be appointed CEO on an interim basis.
Mr Cairns originally joined Magellan as a non-executive director in 2007. Subsequently, he joined the executive team in 2015.
He resumed the top job at Magellan in 2019 replacing founder Hamish Douglass who stepped into the Executive Chairman role.
Brett was instrumental in the development of Magellan’s exchange traded products and in the development of Magellan’s retirement product, FuturePay. On behalf of the Company, I would like to thank Brett for his extensive contribution to Magellan since 2007 and wish him all the very best in his future endeavours.” – Hamish Douglass
Rocky 2021
Magellan has been facing criticism over the past 18 months as its flagship global fund significantly underperformed its benchmark.
An outsized position in Chinese conglomerates and a cautious cash position weighed on performance as markets rallied.
Subsequently, the fund achieved just an 8.5% return over the past year compared to 31.3% for the index.
As a result of the poor performance, the company’s track record across three and five year periods has also been dragged down.
Fees have also been a concern. Its 135 basis point management fee is at the upper end of its peers.
Some analysts suggest a fee cut may be on the horizon or potential outflows, however, Mr Douglass has defended the firm:
“On fees. On the institutional business, which is $80 billion in funds under management. We haven’t seen any questions or pressures on fees whatsoever. We are highly, highly competitive there”.
“I haven’t found any sort of institutional investors who actually find any sort of concern about what’s going on” – Hamish Douglass
“But do we think our overall proposition is uncompetitive in the retail market? No, we don’t. We’re not about to slash fees. It’s not something that we’re hearing”.
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