Magellan’s problems aren’t limited to its own performance. Structural changes in Australia’s super sector are also weighing on listed fund managers.
Structural changes in the super sector could put more pressure on listed fund managers.FUM was $116.4 billion at the end of November last year, underscoring the size of the turnaround task. Magellan shares fell 7 per cent in Monday morning trade and are now down almost 70 per cent in the past 12 months.
The theory behind backing listed ASX fund managers is relatively simple: with billions of dollars pouring in Australia’s superannuation sector every day the likes of Pendal, Perpetual and Platinum Asset Management should enjoy a strong FUM tailwind.In addition, fund managers are seen as having terrific operating leverage –theoretically it shouldn’t take much more resources to manage $1 billion than it does to manage $100 billion.
Some of this is style related, of course – Magellan has a growth tilt which has served it well until the past 12 months, while Pendal, Perpetual and Platinum are more value orientated.But Dunger argues the pressure on fees is likely to build due to structural changes underway in the Australian superannuation sector.
Allocations to passive products in Australia are growing, but still much lower than other markets; equities allocation to exchange traded products is about 5 per cent in Australia, compared to more than 40 per cent in the US.
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