The Magellan Financial Group Ltd (ASX: MFG) share price climbed 0.6% after revealing its update for December 2024.
Magellan is a fund manager that offers funds across global share, infrastructure share and Australian shares for institutions and regular investors.
December 2024 update
The fund manager reported that its total funds under management (FUM) for December 2024 fell to $38.6 billion, down from $39.1 billion at 30 November 2024. This occurred despite a sizeable decline of the Australian dollar compared to the US dollar.
Magellan said it experienced net outflows of $0.4 billion in December 2024, which included net retail outflows of $0.2 billion and net institutional outflows of $0.2 billion.
The fund manager also said that its funds will pay distributions (net of reinvestment) of approximately $0.6 billion in January, which will be included in the FUM figures in next month’s announcement.
On the positive side of things, Magellan said it’s entitled to estimated performance fees of approximately $6 million for the six months to 31 December 2024 (compared to $0.1 million the six months to 31 December 2023). The fund manager noted performance fees may fluctuate significantly from period to period.
The average FUM for the six months to 31 December 2024 was $38 billion, compared to $36.9 billion for the six months to 31 December 2023.
Is the Magellan share price a buy?
Owen Rask shared some thoughts on Magellan on a recent podcast which are worth a listen.
The main thing for a fund manager, in my view, is that it should see FUM going in the right direction over time. I mentioned above that the average FUM for HY25 was $1.1 billion higher than HY24. The December 2024 FUM of $38.6 billion was higher than HY25’s average FUM of $38 billion.
In other words, the FUM is going in the right direction, though the business is still seeing sizeable withdrawals which is a major headwind. Magellan’s funds need to grow faster than the withdrawals or it needs to somehow change the outflows into inflows.
Delivering market outperformance will help with future FUM, but that’s easier said than done.
The rise of more than 20% over the last year with the Magellan share price was pleasing, but it’ll be hard to repeat that unless FUM can sustainably go in the right direction without major assistance from the market.
For me, there are other ASX (dividend) shares that could be better buys.
