The Magellan Financial Group Ltd (ASX: MFG) share price floundered today, closing 3.22% down to $10.82.
That's not far off the wealth manager's 52-week low of $10 a share reached earlier this month.
Magellan has been struggling all year, with its share price down a depressing 43% in 2022. That's four times the losses of the S&P/ASX 200 Index (ASX: XJO), which is down 10% in the year to date.
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What's going on with the Magellan share price?
What a dog of a time it's been for the Magellan share price over the past couple of years. Holy moly.
Before the pandemic hit, this was a stellar stock trading above $65 per share.
But a bunch of things have happened to bring it down to its lows today.
Arguably, the most significant is the ongoing decline in funds under management (FUM).
The worst of it came in December 2021 when the fund manager announced it had lost the St James's Place mandate. This represented 12% of its annual revenue, so it was a mega-hit to Magellan's earnings.
As we reported earlier this month, investors withdrew a net $3.6 billion in September. This took total FUM to $50.9 billion. That's less than half the FUM reported in November 2021 ($116.4 billion).
In addition to the FUM decline, Magellan lost its leader in February.
Magellan announced that co-founder Hamish Douglass was taking medical leave. At the time, he was Magellan's chair and chief investment officer. Co-founder Chris Mackay took over.
Douglass returned to Magellan this month as a consultant stock picker.
Investment staff changes make ratings companies nervous
According to The Australian, rating company Lonsec has placed four Magellan funds on watch.
This includes the Magellan Global Fund (ASX: MGF). It follows the company announcing this week that Mackay would cease overseeing the global equities strategy.
Mackay took on the role after Douglass took leave.
The company also announced some other changes to its investment teams.
Among them, CEO and managing director David George has now been appointed chief investment officer (CIO) as well. George was installed as CEO in August.
Gerald Stack, previously the portfolio manager of the Magellan Infrastructure Fund, is now deputy CIO.
In addition, 10 staff were made redundant.
According to the article, Lonsec does not recommend new investment into the Magellan High Conviction Trust (ASX: MHHT).
In its latest report, Lonsec said:
Lonsec considers the announcement to represent a material change to the leadership of the investment team and will seek to meet with the go-forward team and have the rating resolved as soon as practicable thereafter.
Another ratings company Zenith has also put about 20 Magellan funds under review for the same reason. All of them were previously rated 'recommended' or 'highly recommended'.
The Australian reports that Zenith explained the move in a recent note to clients:
Zenith believes the executive and investment personnel changes are material, noting that Magellan's entire product suite is affected by the changes.
As such, Zenith has placed the following products Under Review until we meet with the relevant personnel, following which we will provide an update.
