Magellan Financial Group Ltd · ASX:MFG
Magellan Financial — Shareholder Meeting (October 2020)
33 slides from Magellan Financial's shareholder meeting presentation, Oct 22, 2020
Slide 1: Magellan Financial Group 2020 AGM Presentation
Magellan Financial Group Limited 2020 AGM Presentation For personal use only Brett Cairns| CEO
Slide 2: Magellan Financial Group Full Year Results
Magellan Financial Group Full Year Results $ million 30 June 2020 30 June 2019 % change Management and services fees 591.6 472.5 25% For personal use only Performance fees 81.0 83.6 (3%) Other revenue 20.3 21.1 (4%) Adjusted revenue 692.9 577.3 20% Adjusted expenses (119.7) (104.0) 15% Adjusted net
Slide 3: Funds Management Business
Funds Management Business For personal use only $ million 30 June 2020 30 June 2019 % change Revenue Management fees 587.2 467.8 26% Performance fees 81.0 83.6 (3%) Services fees 4.4 4.7 (6%) Other income 2.2 5.2 (58%) 674.8 561.3 20% Expenses Employee expense 73.8 62.8 18% Marketing expense 4.9 3.4
Slide 4: Expenses
Expenses For personal use only • Costs associated with strategic initiatives considered as outside day-to-day operating expenses – Excluded from Funds Management business – Excluded from dividend payout • Cost to income ratio (excluding performance fees) of 19.7% during the period – Key driver of pr
Slide 5: Tax and Dividends
Tax and Dividends For personal use only • Effective tax rate for the 12 months to 30 June 2020 is 23.1% (Offshore Banking Unit) • Dividends: – 6 month dividend of 122.0 cents per share (75% franked) comprising: o Final Dividend of 91.6 cents per share o Performance Fee Dividend of 30.4 cents per sha
Slide 6: COVID-19 Update
COVID-19 Update For personal use only • Transitioned to work-from-home operating state across the business in March 2020 • Strong balance sheet allows us to focus on our clients without distraction • No staff reductions and no reduction in hours or salaries • Variable bonus reductions balanced by pa
Slide 7: Funds Under Management Summary
Funds Under Management Summary 30 June 2020 30 June 2019 30 June 2018 For personal use only Closing FUM ($ billion) % % % Retail 26.8 28% 23.2 27% 19.2 28% Institutional 70.4 72% 63.5 73% 50.3 72% Total FUM 97.2 86.7 100% 69.5 100% Average FUM ($ billion) Retail 25.9 20.4 17.3 Institutional 69.6 55.
Slide 8: Investment Performance
Investment Performance For the periods to 30 June 2020 Since For personal use only 1 Year 3 Years 5 Years Inception (%) (% p.a.) (% p.a.) (% p.a.)1 Magellan Global Fund 9.0 15.3 12.0 12.0 MSCI World NTR Index ($A) 4.8 10.6 9.3 6.3 Magellan Infrastructure Fund -8.9 4.3 7.7 7.6 Global Listed Infrastru
Slide 9: Global Equities Downside Protection
Global Equities Downside Protection 1.2 MSCI For personal use only World Net MGF Fund Value Upside performance Downside performance Event Dates Total (%)* Added (%) 1.0 Return (%) July 2007 – Sub-Prime/Bear Stearns -9.2 -1.9 7.3 March 2008 0.8 Lehman/AIG/Reserve Sept 2008 – -43.6 -30.7 12.9 0.6 Prim
Slide 10: Global Infrastructure Downside Protection
Global Infrastructure Downside Protection For personal use only Global Listed 5 years ending 30 June 2020, Magellan Infrastructure AUD Hedged Infrastructure Fund Benchmark1 Downside Capture 0.3 0.7 Relative to MSCI World NTR Index Upside Capture 0.6 0.6 Relative to MSCI World NTR Index As at 30 June
Slide 11: FY20 FUM Flows
FY20 FUM Flows Institutional Net Inflows Retail Net Inflows1 For personal use only 3,500 3,500 $ Millions $ Millions 3,000 3,000 2,500 2,500 2,000 2,000 1,500 1,500 1,000 1,000 500 500 0 0 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 Total net inflows for the 12 months ended 30 June 2020: $5.7
Slide 12: Funds Under Management
Funds Under Management As at 30 June 2020 ($ billion) For personal use only Strategy 30 June 2019 Net Inflows Investment Performance 30 June 20201 Global Equities 64.0 4.4 6.4 74.3 Global Listed Infrastructure 15.2 1.7 -0.9 15.9 Australian Equities 7.5 -0.4 -0.1 7.0 86.7 5.7 5.4 97.2 • Total Funds U
Slide 13: Well-balanced Business
Well-balanced Business For personal use only Funds Under Management1 Base Fees2 28% 46% 54% 72% Retail FUM Institutional FUM Retail Fees Institutional Fees 1. FUM split is as at 30 June 2020. 2. Base Fees are Management and Services fees for the 12 months to 30 June 2020 and exclude Performance fees
Slide 14: Institutional Client Diversity
Institutional Client Diversity For personal use only 1 Cumulative Total Management and Services Fees Top Institutional Clients 5 10 20 30 % 20 26 32 35 1. Management and services fees for the 12 months to 30 June 2020 for separately managed accounts and institutional investors in local and offshore
Slide 15: Listed Unitholder Growth
Listed Unitholder Growth 120,000 For personal use only 100,000 MHH 80,000 60,000 MGG 40,000 Active 20,000 ETFs 0 Number of registered unitholders across Magellan Global Equities Fund (ASX: MGE), Magellan Global Equities Fund (Currency Hedged) (ASX:MHG), Magellan Infrastructure Fund (Currency Hedged)
Slide 16: Active ETF Daily Unitholder Change
Active ETF Daily Unitholder Change 20-day rolling average For personal use only 160 120 Welcomed, on average, 80 55 new unitholders per day in the last 12 months 40 - -40 20-day rolling average change in the number of registered unitholders across Magellan Global Equities Fund (ASX: MGE), Magellan G
Slide 17: Magellan High Conviction Trust
Magellan High Conviction Trust For personal use only • Raised $862 million in October 2019 from the IPO of Magellan High Conviction Trust (“MHH”) • Magellan funded all the costs of the offer including partnership benefits of: – Loyalty Units worth 7.5% of subscription under Priority Offer – IPO Foun
Slide 18: Airlie Australian Share Fund
Airlie Australian Share Fund For personal use only • In June 2020, Airlie Australian Share Fund commenced trading on ASX (ASX: AASF) • Brings together the features of an unlisted fund Airlie Australian Share Fund and Active ETF into a single unit in a single fund • Investors can access the fund thro
Slide 19: The Journey to Today
The Journey to Today For personal use only March 2015 October 2019 Pioneers Active ETFs Lists second closed- allowing investors to ended trust, Magellan access actively managed High Conviction Trust, offering partnership Today investment strategies via the stock exchange benefits Development of a du
Slide 20: Restructure of Global Equities Retail Funds
Restructure of Global Equities Retail Funds • Consolidation of three Global Equities funds into a single trust with two unit classes: For personal use only – Closed Class Units quoted on ASX under the ASX Listing Rules – Open Class Units quoted on ASX under the AQUA Rules and off market access • Sim
Slide 21: Restructure of Global Equities Retail Funds (cont'd)
Restructure of Global Equities Retail Funds (cont’d) For personal use only POST IMPLEMENTATION CURRENT STRUCTURE Magellan MGG MGE Magellan Global Fund Global Fund ($2.3bn) ($1.7bn) ($15.6bn) ($11.6bn) Closed Class Open Class ($2.3bn) ($13.3bn) IF IMPLEMENTED Receive Receive Continue holding Closed C
Slide 22: Restructure Partnership Benefits
Restructure Partnership Benefits For personal use only • Offering all unitholders in the Magellan Global Fund partnership benefits • Subject to the implementation of the restructure, intend to undertake capital raising and bonus options issue in Magellan Global Fund: – $1-for-$4 Entitlement Offer to
Slide 23: Business Resilience and Diversification
Business Resilience and Diversification For personal use only • Magellan has been progressively pursuing a strategy to diversify its revenue stream: – Ongoing growth of our infrastructure business: $15.9 billion of FUM – Direct retail strategy: launch of Active ETFs in 2015 – 42,000 individual unith
Slide 24: Business Resilience and Diversification
Business Resilience and Diversification For personal use only Approximately 28% of Magellan’s total management and services fees are contributed by: 28% – Infrastructure – Global Equities Active ETFs – non platform1 – Airlie 8% – Closed-ended funds 30-Jun-15 30-Jun-20 Future 1. Excludes an estimate
Slide 25: MFG Core Series
MFG Core Series For personal use only • Launching a new series of investment strategies for retail investors that leverages Magellan’s investment philosophy and proprietary research • Aims to broaden Magellan’s reach to areas of the market that are more fee conscious • MFG Core Series offers investo
Slide 26: MFG Core Series
MFG Core Series For personal use only • MFG Core Series will leverage Magellan core research strength with three investment strategies: – MFG Core International Fund – MFG Core ESG Fund – MFG Core Infrastructure Fund • Portfolios are actively constructed and are subsequently rebalanced in a systemat
Slide 27: MFG Core Infrastructure Strategy
MFG Core Infrastructure Strategy Investment performance For personal use only Since 1 Year 3 Years 5 Years 7 Years 10 Years Inception (%) (% p.a.) (% p.a.) (% p.a.) (% p.a.) (% p.a.) Core Infrastructure Net (A$) -1.9 5.0 9.0 10.8 13.3 12.6 Global Infrastructure Benchmark -16.2 -1.4 2.6 6.2 7.9 7.0 C
Slide 28: Other Initiatives
Other Initiatives For personal use only Magellan • Intend to make Magellan’s Global Sustainable strategy available to Sustainable retail investors by the end of the year Fund • Received private binding ruling from the ATO Retirement • Continuing discussions with other regulators income • Seeking to
Slide 29: Principal Investments
Principal Investments For personal use only • We view investments in our Principal Investments portfolio as either: – Internal investments: investments in our funds that provide alignment with our clients and allow for seeding of new strategies – External investments: investments outside Magellan’s
Slide 30: Principal Investments (cont.)
Principal Investments (cont.) Internal investments For personal use only To date our Principal Investments predominantly comprised internal investments Principal Investment portfolio: Investment Returns: Investment ($ million) 30 June 2020 30 June 2019 Time Period Return Cash 1.4 4.6 1 Year to 30 Ju
Slide 31: Principal Investments (cont.)
Principal Investments (cont.) External investments For personal use only Criteria Recent examples High quality management teams • No operational involvement by Magellan 1 • No distraction from our funds Barrenjoey • $155m investment (40% economic stake) in management business Capital newly establish
Slide 32: Important Information
Important Information This presentation has been prepared by Magellan Financial Group Limited ACN 108 437 592 (‘Magellan’). This presentation contains summary information about Magellan and its related bodies corporate and is current as at 22 October 2020. While the information in this presentation
Slide 33: www.magellangroup.com.au
For personal use only www.magellangroup.com.au Phone: +61 2 9235 4888
Magellan Financial Group — Shareholder Meeting (October 2020) on 6ix