ETF February flows: Magellan bleeds again

Rodney Lay

Risk Return Metrics

This report details ASX-listed ETF flows and trends for the month of February 2022 based on data released by the ASX last Friday. The data is based on the value of existing units redeemed (outflows) plus new units created (inflows).it is not based on FUM values which, by being partly based on ETF / market price moves, is not a true indicator of investor demand and underlying growth of the ETF sector.

Magellan Bleeds - Again

Magellan recorded its far and away most significant monthly FUM oulflow - $879m to be precise across its three global equities mandates. No ETF has ever recorded the degree of outflows of MGOC and the consistency of those outflows on a monthly basis. Many ETFs have flows that vary over time due to investors prudently making tactical asset allocation decisions with respect to changing market environments / outlooks. But what the Magellan funds are currently losing ($2.25bn since May 2021) is not coming back. All three Magellan funds have just notched up their worst Maximum Drawdown numbers and counting (Year-to-date total returns: MGOC -17.6%; MHG -16.7%; MHHT -21.4% vs the S&P 500 TR Index of -11.1%). Of course, the current drawdowns may well not be over. And we must say we have not been encouraged by the ‘more of the same’ implicit messaging from Chris Mackay.

Tactical Asset Allocation Moves - Equities.

Quality / Value continue to record solid FUM growth as do Property and Infrastructure (ASX: IFRA, VBLD, REIT, MVA, DJRE). Interestingly both Short and Geared U.S market ETFs (ASX: BBUS, SNAS, LNAS, GGUS) recorded comparable positive inflows. It is likely investors are expressing both outright market directional views but alternatively hedging strategies. For example, a short U.S position takes a degree of existing long market risk off the table, yet without having to sell down these existing long exposures.

Tactical Asset Allocation Moves – Fixed Income.

In fixed income, and in what we see as a positive sign, it appears the market is finally cottoning on to the fact that the very long duration government and semi-government (fixed rate) bond ETFs are probably not the best exposure currently. There has been significantly higher FUM growth in active managed fund strategies (ETMFs), high yield (e.g. ASX: IHHY, SUBD), floating rate vehicles, including inflation linked bonds (ASX: ILB) and bank loans (ASX: FLOT), and bank hybrids (ASX: HBRD, DHOF, GCAP).

Download the PDF to access the full ETF Flows report

Click on the pdf below to access Monthly Flows and Trends:

  • ETF Sector;
  • Major Issuers;
  • Top / Bottom 20 ETF by In/Outflows.
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Rodney Lay
Risk Return Metrics

Investment analyst with particular experience in listed and unlisted investment strategies, equities and structured products.

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