In a strong start to the trading week for ASX financial stocks and the S&P/ASX 200 Index (ASX: XJO), the market saw a rise of 0.29%, pushing the index above the 7,000-point threshold. However, the Magellan Financial Group Ltd (ASX: MFG) share price encountered a turbulent morning. It currently hovers at $6.95 per share. The share price opened the session at $6.91, declining to as low as $6.86 before stabilizing.
Challenges in Magellan's Journey
The erratic share price movements of Magellan are closely linked to the ongoing struggle the company faces with its funds under management (FUM). This year-long saga has been marked by a series of challenges, including internal controversies, key personnel changes, and concerns over the performance of its funds. These issues have taken a toll on Magellan's reputation and its financial health.
Magellan's FUM, which once exceeded $100 billion, had dwindled to approximately $35 billion by the end of September. In the previous month, September alone, the company recorded a significant 10% reduction in FUM, plummeting from $39 billion to $35 billion.
Latest FUM Report for October
Magellan recently published its FUM update for October, offering insights into the company's performance during the month. Unfortunately, the update is far from positive. Magellan's total FUM continued to decline, falling from $35 billion at the end of September to $34.3 billion by the close of October. Although this constitutes a 2% reduction, it signifies a notable improvement compared to the 10% decline reported in the preceding month.
Breaking down the figures, Magellan disclosed $300 million in outflows from retail investors, coupled with an additional $500 million in institutional outflows.
The market's reaction to the FUM figures appears mixed, as evidenced by Magellan's share price performance on Monday. Investors are likely disappointed by the persistent FUM decline. However, they might also find some relief in the relatively better October figures. The month of November will be closely observed to determine the trajectory of Magellan's FUM trend.
Magellan Share Price Snapshot
The Magellan share price has faced a tumultuous year, characterized by a 20.4% year-to-date decline and a nearly 28% drop over the past 12 months. Investors have witnessed a significant decline since the stock's all-time high, which exceeded $74 per share in February 2020.
At the current share price, Magellan Financial Group commands a market capitalization of $1.21 billion and offers a trailing dividend yield of 12.49%.