Magellan (ASX:MFG) shares tumble over 8%. Here’s why

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Highlights:

  • Magellan is the biggest loser on ASX as at 2:00 PM AEST today (4 July).
  • The share price of the company has lost 8% so far today and has gone down over 75% in a year.
  • News reports stating that head of sales Frank Casarotti is planning to exit the company, have also likely pulled down the share price today. 

Diversified financials company, Magellan Financial Group Limited’s (ASX:MFG) shares have dipped below 8% today (4 July). In fact, MFG is the top loser on the ASX so far. The sudden fall is seen despite any new price sensitive announcements being released by the company. Though last Friday (1 July), Magellan’s co-founder Hamish Douglass sold more than 760,000 shares in the company. Also, as per media reports, Magellan’s sales and distribution head, Frank Casarotti is quitting the firm.

How have Magellan shares performed recently?

Magellan share price is already down over 75% in last one year. MFG share price has been riding on a bumpy road for quite some time now. The share price has been fluctuating between AU$11.10 to AU$56.18 apiece in last 52 weeks. However, one positive factor that might have kept investors holding on to Magellan’s shares could be its dividend yield. The annual dividend yield on MFG shares as of date is 17.24%. Magellan has also been quite regular in paying dividend, though the amount paid has fluctuated a bit.

Then what’s wrong with Magellan shares?

While MFG’s distribution yield is seemingly high, the share price performance does not appear much satisfactory. In recent times, even Magellan’s fund strategy and fund management have reportedly been a part of street talk. Meanwhile, market uncertainty and factors like rate changes and inflation are also probably worrying investors. Magellan, being a huge financial organisation, has funds deployed even outside Australia. As per the ASX, the principal activity of Magellan is funds management with an objective of offering international investment funds to its investors. Therefore, the funds’ investments are even subject to the global market turmoil.

A look at Magellan’s peers

Magellan’s peers, as per the ASX website, are Netwealth Group Limited (ASX:NWL), Pendal Group Limited (ASX:PDL) and Perpetual Limited (ASX:PPT). While in the last one month, MFG share price has lost more than 6%, Netwealth shares have only lost 3.5%. Meanwhile, Pendal group and Pepetual Limited shares have tanked more than 11%.

Overall, the financial sector seems to be having a gloomy time. In the last thirty days the financial sector index (XFJ) is down about 10%.

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