Magellan confirms job losses

Magellan has confirmed "a number of roles" will be impacted after it outsourced its global equities strategy earlier this week.

The Magellan Global Fund - Open Class Units - Active ETF (ASX: MGOC) and the Magellan Global Fund Hedged investment strategy will be changed to the Vinva Global Alpha Strategy, and Vinva Investment Management will be appointed as investment manager for the funds.

The funds have approximately $5.3 billion in assets under management (AUM), as at April 30.

Magellan will remain the responsible entity for the funds and retain responsibility for distribution.

Additionally, Magellan said it intends to close the Magellan Global Equities Fund (Currency Hedged) (ASX: MHG). The fund had around $94 million AUM, as at April 30.

After the announcement there was talk on LinkedIn that job cuts would impact fund managers and administration workers throughout Magellan.

A Magellan spokesperson would not confirm to Financial Standard the exact number of employees affected but did confirm there would be job losses.

"As a result of changes to the global equities strategy, a number of roles will be impacted. We are consulting with those affected and are focused on providing appropriate support throughout this process," the spokesperson said.

"We expect the Magellan Global Opportunities Strategy to operate with a dedicated team of six at the conclusion of this process. Alan Pullen will continue as portfolio manager, with Ryan Joyce as deputy portfolio manager.

"We thank those departing for their significant contribution and will continue to assist them through the transition."

Under the changes Magellan will reduce the management fees for the funds from 1.35% p.a. to 0.89% p.a., and performance fees will no longer be charged.

Morningstar equity analyst Shaun Ler said the changes were an acknowledgement of competitive pressure.

"Magellan is ceding management of its flagship strategy and slashing fees, steps it has historically resisted. The shift to lower-cost systematic approached also reshapes Magellan's own product suite," Ler said.

"We don't expect earnings improvement. The fee reduction compresses margins directly and cost savings offer only a partial offset. Magellan explicitly flagged continues short- to medium-term outflow risk stemming from the strategy change, which limits the pace of any near-term earnings recovery."

However, Ler added that Vinva is the better performing manager of the two.

"It is relatively well rated by research houses, though considerably less known than larger domestic peers. This may slow redemptions from Magellan over time, but won't reverse them," he said.