Magellan chairman Hamish McLennan has called time on the rock star boss as he taps a low-profile Future Fund executive as the next chief executive of the troubled fund manager.McLennan has rightly gone for an outsider to steer Magellan as he seeks to develop the next generation of financial chief executives.Now the test will be on George, who has had only limited executive experience with a listed company – namely at Canada’s RBC Royal Bank – with the bulk of his management career at the $162bn Future Fund.The Canadian national, who still tries to catch an overnight game of his Toronto Maple Leafs ice hockey team on ESPN, takes charge of Magellan in August.His mandate is to stabilise the fund from the personal issues of former executive chairman and head stock picker Hamish Douglass and the sudden exit last year of Brett Cairns.George joined the Future Fund in Melbourne in 2008 to build up the agency’s debt and alternatives team.From there moved on to the leadership team as deputy chief investment officer, helping to oversee the strong performance of the portfolio including listed equity, credit and alternative investments.
While George has experience with investment consultants Mercer, the deeply conservative Future Fund has a captured fund without having to drum up excitement among financial planners or big pension funds for mandates.Magellan will be more lucrative than the Future Fund for George with a $600,000 cash sign-on fee and the potential to earn up to $3.6m before taking into account share options.Douglass, who since early February remains on extended medical leave to focus on personal issues, was not involved in the selection process, including the five-person committee headed by John Eales, who interviewed the new CEO.This highlights the distance now between Magellan and its co-founder and biggest shareholder as the fund seeks to rebuild.Other people linked to the Magellan role include outgoing ASX chief executive Dominic Stevens, so to former Perpetual and MLC boss Geoff Lloyd.
Stevens has previously hosed down the prospect of another CEO position.As part of the shake-up George will take direct responsibility for the investment functions as well as having overall responsibility for Magellan’s operations as the CEO.Previous chief executive Brett Cairns kept away from the investment side, leaving that to executive chairman Douglass.The question is what role Douglass will have for his eventual return to Magellan, with his former chief investment officer post now taken and also the board now bulked up with independent directors.
‘Tough quarter’ The incoming boss who has a track record in bringing together teams, will now have his work cut out.Primarily he needs to calm investors in the fund – particularly institutional investors that continue to pull money from the global fund.George on Wednesday was giving away little ahead of officially taking charge.He said Magellan has significant depth of talent and wanted to build out the fund manager to generate “strong and sustained” investment results.He also noted work to do on “building and maintaining relationships” in an acknowledgment of the battering the Magellan brand has taken among investor clients.
George remains in high regard at the Future Fund and will continue in his current job in coming months to help the transition.Future Fund chief Raphael Arndt notes that he has has provided “outstanding leadership” during his time.His referee for the position is understood to have included former long-serving Future Fund boss and now IFM Investors chief executive David Neal.With the technology slump on Wall Street, Magellan is in for another tough quarter.
Over April Magellan’s funds lost another $1.4bn, falling to $68.6bn, its lowest level since February 2018.Most of the losses come in the global equities fund.Even after selling down its exposure to Facebook owner Meta and Netflix since the start of the year, the fund still has a large holding in tech stocks Microsoft and Google owner Alphabet.Both the companies have been caught in the sharp tech sell down as interest rate expectations reset in the US.The upheaval of the past six months has caused some instability inside the fund team.Compounding the pressure is the prospect of a shrinking revenue base for Magellan following the near halving of funds under management since November.Others to keep onside are chief financial officer Kirsten Mortan, who steadied the ship as interim CEO following the exit of Douglass.
In addition to the finance role, she will take on the dual position of chief operating officer that will see her continue to have an active role in day-to-day management of the fund manager.Internally he needs to review the governance of the organisation which has been built up over two decades around Douglass.And then George needs to tackle the performance of the global fund alongside whether the 30-plus stocks have the right thematics as the world enters a period of inflation and slowing growth.Other stocks with major positions include McDonald’s, Pepsico, consumer goods player Procter & Gamble and KFC owner Yum! Brands.
The appointment comes on the back of this week’s messy sale of its 11.6 per cent interest in Mexican fast-food chain Guzman & Gomez to a fund owned by Magellan’s associated Barrenjoey Capital Partners.While the $140m sale was aimed at simplifying Magellan allowing it to focus on its flagship funds, investors marked the fund manager down sharply, fearing the holding was sold too quickly, losing out on potential upside for equivalent private equity investments.ASX delays The ASX has pushed back its major system rebuild with the tentative April 2023 go live date formally shelved due to delays in software being written.A new launch date for the $250m clearing and settlement platform which will use blockchain technology underpinning crypto currencies to replace its ageing CHESS system is yet to be settled on with the ASX holding talks with its tech partner Digital Asset as well as the brokers who will use the new high-tech system.
When the project kicked off in 2018 the go live timing of the project was slated as April 2021.A new chief executive will be well in place by the time the new trading platform finally goes live with ASX chief executive Dominic Stevens flagging his retirement in February.A new chief has yet to be named.After several major tech glitches in recent years including a four-hour outage in March , the ASX is treading cautiously when it comes to its technology.It acknowledges the project is “innovative and complex” and the priority is to “balance safety and efficiency” in the replacement.Like most tech projects it is battling a local shortage of specialist workers and facing competition from major players such as Atlassian and Canva for staff.A new go-live date will be settled on after further talks with Digital Asset as well as industry testing.The delay in the ASX platform upgrade coincides with a small side step into the future with Thursday’s launch on rival exchange provider CBOE (the former Chi-X) of Australia’s first regulated Bitcoin ETF.
The Cosmos-Purpose Bitcoin Access ETF has been nearly three years in the making with intensive regulatory and also political scrutiny, before NSW Senator Andrew Bragg added a push for the fund to list as part of his attempts for regulators to embrace cryptocurrencies and digital assets.
The Cosmos fund is being launched in the midst of a bitcoin bear market, and is essentially a feeder fund, holding units in the Canadian-listed Bitcoin ETF which in turn holds “physical” [email protected] Originally published as Magellan Financial calls time on the rock star boss with David George appointment.