August another good month for Magellan

Impressive fund performance is continuing to benefit the boutique asset manager.

Tom Richardson

Tom is a holder of the CFA Society of the UK administered Investment Management Certificate (IMC) and has more than a decade's professional experience in the investment management industry in Australia and the UK. Tom now works as a writer and editor for TMF Australia and has two easy to remember rules of investing he likes to follow. Avoid overpaying for growth stocks and avoid paying at all for stocks that are cheap for a reason. Tom prefers growth investing over value investing and says it's not rocket science, just avoid overpaying for the best returns.

Published September 6, 2013 1:43 pm AEST

Established in 2006 Magellan Financial Group (ASX: MFG) has rapidly attracted wholesale and retail investors alike. The group recorded an underlying profit after tax of $48.5 million for the year ended 30 June 2013. That's a rise of 254% on the prior year, largely due to positive international equity markets.

As of 31 August 2013, Magellan had total funds under management (FUM) of approximately $16.4 billion. Just a month earlier, on 31 July, total FUM was less than $16 billion. The increase was a result of total net inflows for the month of $705 million. This included net inflows of $486 million into institutional mandates and $188 million of retail inflows.

Turn the clock back two years and an investor can see quite how outstanding the group's success has been. As of 30 June 2011 total FUM was a mere $2.76 billion, compared to today's $16.4 billion. In that period the group has attracted over $5 billion of institutional investors' money from outside Australia, with much of the success down to operational growth in the United Kingdom and North America.

Unsurprisingly the share price has surged, up over 340% in the past year alone. Several portfolios the group manages have outperformed their benchmarks and that success has fueled the inflows.

The Magellan Group also runs an ASX-listed investment company, the Magellan Flagship Fund (ASX: MFF). It invests in a portfolio of international equities and as the Flagship, has one of Magellan's gun fund managers, Chris Mackay in command.

Foolish takeaway

Ferdinand Magellan the man was a Portuguese explorer and navigator, reputedly the first to circumnavigate the world. The eponymous fund manager is blazing its own global trail and like the sailor, has been enjoying some tailwinds. The modern-day Magellan ship looks to be one still worth getting aboard.

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Motley Fool contributor Tom Richardson does not own shares in any of the companies mentioned in this article.

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