Why Is Magellan Switching MHHT ETF to a Lower-Fee Global Strategy?

Strategic Shift in Magellan’s ETF Offering

Magellan Asset Management has announced a significant change to its Magellan High Conviction Trust Active ETF (ASX – MHHT), transitioning the fund’s investment approach to the Magellan Global Opportunities Strategy effective mid-September 2025. This move follows a comprehensive review aimed at streamlining Magellan’s global equity products to better align with evolving client needs and market dynamics.

CEO Sophia Rahmani highlighted the rationale behind the shift, emphasizing agility and responsiveness in a rapidly changing funds management landscape. While the High Conviction Strategy has historically been well-regarded, the Global Opportunities Strategy offers a compelling alternative with a lower fee structure and a strong track record of benchmark-beating returns.

Performance and Fee Benefits

The Global Opportunities Strategy, launched in early 2022 and managed by Alan Pullen alongside Magellan’s experienced Global Equities Team, focuses on investing in 20 to 40 high-quality companies with sustainable competitive advantages. It aims to outperform the MSCI World Net Total Return Index (AUD) over three years or more, boasting net returns of 22.3% over the past year and 23.0% per annum over three years to July 2025.

Importantly for investors, the fund’s management fee will be reduced from 1.50% to 0.75% per annum starting from the effective date, while the performance fee of 10% above a 10% hurdle is waived immediately. Magellan will also forgo management fees during the transition period, estimated between 8 and 15 September, easing the cost impact of the portfolio changeover.

Leadership Transition and Portfolio Management

Current portfolio manager Nikki Thomas will oversee the High Conviction Strategy until the transition period begins, after which Alan Pullen will assume management of the fund. The announcement also confirmed Ms. Thomas’s departure from Magellan, a mutual decision acknowledged with appreciation for her contributions. Thomas expressed gratitude for her time at Magellan and support for the firm’s future direction.

The transition marks a clear pivot in Magellan’s approach, moving from a concentrated portfolio of 10-20 stocks with higher cash exposure to a more diversified 20-40 stock portfolio with a maximum 5% cash holding. This diversification aims to reduce company-specific and sector risks while maintaining a focus on sustainable competitive advantages.

Implications for Investors and Market Positioning

Unitholders are not required to take any action, but Magellan has committed to providing updated disclosures and a new ASX ticker ahead of the change. The fee reduction and strategic realignment could make the fund more attractive to a broader investor base, especially those seeking lower-cost global equity exposure with strong performance credentials.

This strategic evolution reflects Magellan’s broader ambition to refine its product suite and maintain competitiveness in a crowded asset management market. The success of this transition will be closely watched by investors and analysts alike, as it signals both a tactical and cultural shift within the firm.