Magellan Financial Group Ltd (ASX: MFG) shares are on watch this morning after announcing its December 2020 update.
Magellan is one of the country’s largest fund management businesses.
December 2020 update
Magellan revealed that its total funds under management (FUM) had fallen from $103 billion at 30 November 2020, to $101.4 billion at 31 December 2020.
The infrastructure strategy saw FUM rise by around $100 million to almost $18.3 billion. The Australian share strategy saw FUM rise by around $200 million to almost $8 billion. However, the global share strategy saw FUM decline by $2 billion to $75 billion.
In December, Magellan experienced net inflows of $579 million, which included net retail inflows of $327 million and net institutional inflows of $252 million.
Magellan’s funds will pay distributions (net of reinvestment) of approximately $132 million in January, which will be reflected in the FUM figures in next month’s announcement.
Magellan is entitled to performance fees of approximately $12 million for the six months to 31 December 2020.
Average FUM for the six months ending 31 December 2020 was $100.9 billion, up from $92.8 billion for the six months to 31 December 2019. Part of the problem has been a stronger Aussie dollar/weaker US dollar which has lowered the value of Magellan’s US assets in Australian dollar terms.
Time to jump on Magellan shares?
I’ve been writing frequently about Magellan shares recently because I believe that it’s a good opportunity, particularly after the Magellan share price decline in recent weeks.
Sure, Magellan’s funds’ investment performance has been disappointing over the past few months. US tech shares and Chinese tech shares have been hurt with recent investor sentiment changes, which makes up a sizeable part of Magellan’s portfolios. But short term investment performance doesn’t mean the long term performance will be bad.
Magellan has been a long term performer, it may find new opportunities or the tech shares’ performance could turn around.
Besides, I was pleasantly surprised at how much FUM inflows Magellan attracted in one month. This is a good sign for future FUM flows as/when the investment performance gets better.
I’m also attracted to other growth opportunities for Magellan including the planned retirement product and its investments in Barrenjoey and Guzman y Gomez.
At a share price of around $50 I think Magellan is a solid long term investment idea today. There are other ASX dividend shares that could also be good long term picks like Brickworks Limited (ASX: BKW).
