Magellan Expected to Benefit From Net Inflows and an Increasingly Diversified Revenue Base

We think Magellan has built the foundations for strong future earnings growth from the significant scale it now has in its fund management business. 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. In addition, the firm is generating solid returns in its principal investments business which invests in its funds, listed shares and some unlisted investments.