Magellan Leveraging Its Intangible Brand to Attract More Funds; We Expect Success

We think Magellan has built the foundations for strong future earnings growth from the significant scale it now has in its fund management business. This scale has been built over time by generating above-market performance on existing funds under management, or FUM, as well as attracting new FUM. Funds have been attracted by achieving excess returns with lower volatility and drawdowns relative to most peers. Additionally, the firm has benefited from an effective distribution team which has helped establish its brand. This places it in a strong position to benefit from Australia’s growing pool of self-managed superannuation funds that still have a relatively low allocation to global equities. It already boasts total FUM of above AUD 97 billion, consisting of its core global equities strategies, infrastructure equities strategies and Australian equities strategies. In addition, the firm is generating solid returns in its principal investments business which invests in its funds, listed shares and some unlisted investments.