The Magellan Financial Group Ltd (ASX: MFG) share price has risen 6% after announcing its monthly funds under management (FUM) update for June 2024.
Magellan is a fund manager that invests in global shares, Australian shares and infrastructure shares. It used to be a lot bigger but has seen a lot of FUM flow out of the door as investors lost confidence in the fund manager.
June 2024 FUM update
Magellan announced that its total FUM at 30 June 2024 was $36.6 billion, down from $36.7 billion in at 31 May 2024.
However, in June, Magellan’s net flows were flat and were made up of net retail outflows of $0.2 billion and net institutional inflows of $0.2 billion. Flat net flows may not sound exciting, but Magellan was previously seeing net outflows of at least $1 billion a month, so there has been a big improvement.
Magellan said its funds will pay distributions (net of reinvestment) of approximately $0.2 billion in July, which will be reflected in the FUM figures in next month’s announcement.
Looking at the individual strategy FUM balances, global shares FUM rose to $15.7 billion over the month from $15.5 billion, the infrastructure shares FUM dropped to $15.5 billion, down from $15.8 billion and the Australian shares FUM was flat at $5.4 billion.
Performance fees
Magellan also announced how much in performance fees it’s expecting to be entitled to. It has estimated this figure will be $19 million for the financial year ended 30 June 2024.
The fund manager noted that performance fees (if there are any) may fluctuate significantly from period to period.
Final thoughts on the Magellan share price
The fund manager has been through a lot of pain over the last two or so years, losing its talisman Hamish Douglass and a heap of FUM. While flat FUM flows aren’t exactly amazing, the fact is that it’s a great improvement from what was happening 12 months ago. Flat FUM flows could mean growing FUM seeing as share market values generally go, or have gone, up over time.
I wouldn’t choose to invest today, I’d want to see more evidence that FUM outflows have stopped. But, if they have, it could be an undervalued idea if FUM can rise over time. Until then, there are other ASX dividend shares that I believe could achieve more growth.
