Magellan Financial Group co-founder Chris Mackay has issued a vote of confidence in the beleaguered firm’s chief investment officer Hamish Douglass after the fund manager revealed it had lost a “material contract” with one of its major clients.
In an ASX statement late on Friday, Magellan requested a trading halt due to “the termination of a material contract,” widely believed in market circles to be with St James’s Place, one of the largest wealth managers in the United Kingdom. It follows a sharp decline in the performance of Magellan’s global equities fund and recent leadership instability. St James’s Place has not responded to repeated requests for comment from The Sydney Morning Herald and The Age in the past week.
“I’m very supportive of Hamish and the business,” said Mr Mackay, who co-founded Magellan with Hamish Douglass in 2006. “Magellan has an amazing talented team and provided we remain client focused and continue to develop our team, Magellan will be resilient and succeed over time.”
Magellan co-founder Chris MacKay (right) has thrown his support behind the troubled investment firm.
Mr Mackay is no longer a director of Magellan but remains one of the biggest shareholders in the firm, which has around 140 staff and manages $115 billion.
Magellan’s chief executive Brett Cairns shocked shareholders and the investment community when he quit unexpectedly this month executive, citing “personal reasons”. Mr Douglass, Magellan’s chief investment officer and executive chairman, also revealed in a statement that he was dealing with some personal matters, after announcing he had separated from his wife.
Loading
Mr Cairns departure, the substantial underperformance in the global fund has been of concern to Magellan’s shareholders, clients and staff. Shares in Magellan’s ASX-listed holding company have halved over the past year.
A series of poor investment decisions have contributed to the global equities fund’s severe underperformance.
Stockbroking firm Jarden released a report in September flagging that Magellan was at risk of losing one of its largest and longest held clients, St James’s Place (SJP). Jarden estimated the SJP mandate was worth around £10 billion ($18.6 billion), about 16 per cent of Magellan’s total funds under management.
