Magellan Financial Group Limited (ASX: MFG) recently published a report regarding its total FUM (or funds under management) number as at March 29, 2019. As per the announcement, its total FUM amounted to A$79,442 million, reflecting an increase from February 28, 2019, number of A$76,030 million. The report also highlighted that in March, Magellan witnessed net inflows amounting to $1,177 million, which included net retail inflows of $357 million, as well as net institutional inflows of $820 million. In another update, the company communicated the appointment of Marcia Venegas as a Company Secretary and the exit of Mr. Geoffrey Stirton, who held this position previously.
The company’s management reflected favourable views for the half-year ended December 2018 and noted that Magellan’s first half was supported by the robust investment performance in the volatile market conditions. The company’s average funds under management witnessed a rise of 35% and stood at $72.1 billion. MGF reported management and services fee revenue of $228.1 million, an increase of 28% compared to the same period last year. MFG reported adjusted net profit of $176.3 million, an increase of 62%. Looking at the expenses side of the business, the company’s expenses witnessed a fall of 4% and stood at $48.2 million. The fall in costs was driven by the reduction in the US marketing fees and group marketing expenses. As at December 31, 2018, the company reported FUM of $70.8 million, which was divided between global equities (74%), infrastructure equities (17%) and Australian equities (9%).
We will now have a closer look at what we can expect from Magellan Financial Group in FY2019. The company’s expenses (ex-non-cash amortisation and Magellan Global Trust Unit Purchase Plan) are expected to be around $105 million in the financial year 2019 ($101 million for FY2018). During the same period, non-cash amortisation is anticipated to be around $4.7 million in the financial year 2019. The company also communicated its plans to maintain a robust balance sheet in proportion to the scale of business, which includes increased levels of liquidity in order to ensure that the business will withstand almost any market condition or the unforeseen event.
In the half year ended 31 December 2018, the company reported its policy to pay interim as well as the final dividend of 90% to 95% of net profit after tax of funds management segment of the group (excluding performance fees and amortisation).
Looking at the stock performance of the company. At market close on 18th April 2019, the stock of Magellan Financial Group was trading at $40.780, marginally down from its previous closing price. In the span of the previous six months, the stock has delivered a return of 50.74%, and for the past three months, the stock has generated a return of 47.69%. The market capitalisation of Magellan Financial Group stands at $7.26 billion. As per ASX, the stock is having an annual dividend yield of 4%.
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