The Magellan Financial Group Ltd (ASX: MFG) share price is up more than 5% after the funds management business announced its FY26 half-year result.
Magellan is a fund manager offering global shares, ASX shares and infrastructure shares strategies. It also has stakes in FinClear, Vinva and Barrenjoey.
Magellan FY26 half-year result
Here are some of the highlights from the first six months of FY26:
- Investment management revenue fell 17% to $106.9 million
- Partnership income grew 109% to $25.7 million
- Fund investment income increased 14% to $26.4 million
- Operating profit fell slightly to $83.1 million
- Operating earnings per share (EPS) rose 5% to $0.486
- Statutory net profit fell 27% to $68.9 million
- Dividend per share hiked by 50% to $0.395
What happened in this result?
Magellan said that growth in the average assets under management (AUM) was offset by a reduction in the average management fee to 0.55%, no performance fees and growth in sub-advisory fees in line with Vinva Systematic Equities AUM growth.
In revenue, management fees dropped by $10 million (or 8%) and performance fees declined $6.1 million (or 99%).
AUM grew by 3% to $39.9 billion, while the average FUM grew 6% to $40.2 billion.
The partnership income growth was driven by strong growth for Barrenjoey and Vinva.
The operating EPS benefited from the impact of the continued share buyback.
Partnerships becoming increasingly important
Partnership income represented around 31% of operating profit and this figure is rising.
Barrenjoey reported that its net profit grew 114% to $54 million – Magellan does not own the whole business – with revenue growth of 45% to $295.3 million. It saw revenue growth across every business line.
This strong growth at Barrenjoey allowed the business to double its annual dividend.
Barrenjoey also saw “material” growth in fixed income revenue from increased international client activity from the Abu Dhabi Global Markets branch.
Barrenjoey now has around 450 staff across five offices, including Abu Dhabi and Hong Kong.
Vinva is seeing strong client interest and increasing flows, with $400 million net flows across its four funds in the HY26 period. Vinva delivered investment outperformance across all strategies.
Outlook for the Magellan share price
The company outlined a few different priorities for the business.
It said it’s going to leverage and support its global distribution platform to attract and retain clients in “established and new client solutions”, as well as a continued focus on improving long-term investment performance.
Magellan also said that it wants to “expand client solutions in line with evolving client needs through partnership and organic development”.
The business said that it’s continuing to evaluate new strategic partnership opportunities across both investment management and specialist financial services.
It’s also maintaining a focus on operational efficiency and excellence including investment in AI to simplify and automate its investment and non-investment operations.
While the funds management business is struggling, its other investments are performing strongly.
It’s an interesting idea for dividends because there are promising shoots of growth. It’s one of the ASX dividend shares I’d keep an eye on.
