Shares in Magellan Financial Group, the fund manager headed by former Deutsche Bank investment bank Hamish Douglass, fell to a two-month low after performance fees almost vanished and dragged first half profits lower by a fifth.
Net profit fell to $87 million in the six months to December 31, down on $109.3 million a year earlier. Performance fees slumped to just $3.6 million, down from $42.8 million.
A short while ago, Magellan shares were 8.5% lower at $23.
Magellan boosted funds under management on the back of its previously market-beating returns. That in turn multiplied the performance fees, but the subsequent massive drop in fees comes amid fund managers everywhere struggling to maintain returns amid global volatility.
The return on Magellan’s flagship fund, Magellan Global, fell in the past 12 months to just 3.7%, compared to a five-year record of 19.2%. The annual return also lagged the 8% yield of the benchmark index.
Management fees, which is based on the total funds under management climbed 10%.