Magellan Financial Group Ltd (ASX: MFG) has been one of the best performing shares in the ASX 200 this year.
Magellan is a funds management business that largely invests in international shares like Facebook and Visa. It was set up in 2006 by Hamish Douglass and Chris Mackay. Since inception, Magellan claims it has been one of the most consistent market outperformers after fees.
Why Magellan Shares Are Going So Well
Magellan derives its management fees from the size of its funds under management (FUM). The global share market went through a bit of a dip at the end of December 2018 but it has come storming back since. The higher the FUM the more fees Magellan earns.
This morning, the fund manager revealed that its total FUM at 30 April 2019 had grown to $83.2 billion from $79.4 billion at the end of March 2019.
Its global equities strategy achieved most of the growth with an increase of $3 billion. Magellan experienced $462 million of net inflows which included net retail inflows of $130 million and net institutional inflows of $332 million.
At the end of December 2018 it had FUM of $70.8 billion, so it has grown its FUM by 17.5% in just four months.
With Magellan’s impressive record of long term outperformance it also means it is generating higher outperformance fees.
Magellan is proving to be exceedingly popular for both retail and institutional investors who want diversification away from businesses listed on the ASX like Telstra Corporation Ltd (ASX: TLS) and Commonwealth Bank of Australia (ASX: CBA).
The fund manager recently changed its dividend policy to pay out nearly all of its profit each year to shareholders every year. Fund managers don’t need much more capital each year to expand, they are very scalable.
Is Magellan A Buy?
Whilst Magellan is performing very well at both attracting funds and managing the funds it does seem the share price may have gone too far for the shorter term.
At some point there will be a downturn in the US which may drive US share prices down and investors may decide to pull their funds out of Magellan – a painful double whammy. FUM can be fickle.
If you want ASX shares creating growth away from Australia then the two rapid ASX growth shares in the free report below could be solid ideas.
2 Of The Best Growth Shares On The ASX?
[ls_content_block id=”14947″ para=”paragraphs”]
[ls_content_block id=”18380″ para=”paragraphs”]
