SQM downgrades 3 Magellan infrastructure funds

Mike Taylor

Managing Editor/Publisher, Financial Newswire

2 November 2022

Fund manager Magellan has taken another ratings hit, with research and ratings house, SQM Research, downgrading three Magellan infrastructure funds.

SQM has informed subscribers that it has downgraded the funds from 4.24 stars to 4 stars based on what the ratings house described as “a series of material corporate developments and announcements”. It emphasised that 4 stars was still a strong rating.

The funds involved are the Magellan Infrastructure Fund – Hedged, the Magellan Infrastructure Fund – Unhedged and the Magellan Infrastructure Fund ETF.

According to the SQM analysis, the “rating action directly reflects the most recent team announcement involving the elevation of Mr Gerald Stack to Deputy CIO while concurrently maintaining his long-held role of Head of Infrastructure”.

“While this is designed to enhance the Firm’s overall management focus and effectiveness, SQM believes it comes at some cost to the capabilities of the Infrastructure investment team,” it said. “The splitting of Mr Stack’s time and efforts between two vital roles comes at an inopportune time for the Infrastructure team, who are currently undergoing a period of challenging underperformance.”

“Until recently, Mr Stack has been a key and autonomous PM and largely separated from the directorship changes at the parent company level. It is SQM’s opinion that this represents an additional risk to the future outlook for outperformance from these funds.”

SQM’s analysis went on to note that the 4 star rating was a strong rating and recognised the ongoing strengths of the Magellan Group, the infrastructure team and Mr Stack.