Home »Today’s ASX News» Magellan’s (ASX: MFG) share price drops 28% after losing its biggest customer
Magellan’s share price is of Magellan Financial Group Ltd (ASX: MFG) Down 28% after St James’s Place (SJP) was confirmed to have terminated its mandate with the company.
Today’s news comes after Magellan suspended trading on Friday afternoon pending further information on the termination of a material contract .
In a somewhat anti-climatic announcement – as it was speculated that SJP would withdraw its funds on Friday – Magellan made a brief statement about the loss of its biggest client.
For the outcome of the This means a decrease of 6% in FY22, but will not have a material impact on the half-year results, which will end this month.
Magellan is facing increasing pressure due to poor performance and a relatively high fee structure s market.
The global flagship fund underperformed 14.6% for the past 1 year and is now below its benchmark for three, five and seven years.
The company announced last week also announced the sudden departure of its chief executive, in addition to the disclosure of a chief investment officer issuing a statement that it is pending divorce.
Given the lack of information, it is somewhat surprising that Magellan waited an entire weekend has, to give just one answer in two paragraphs.
You’d think the market overreacted to the announcement. Magellan has lost 28% of its market value as SJP only accounts for 6% of sales.
But it will be the risk of a snowball effect that will push the market to exit.
Even if institutional clients stay, they will likely knocking on the door for a fee cut.
In addition, it will now be nearly impossible for financial advisors to recommend Magellan funds and meet their best interest commitments.
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