Why the Magellan (ASX:MFG) share price outperformed today

The Magellan Financial Group Ltd (ASX: FMG) share price was an ASX 200 outperformer today. Here's what might have caused MFG shares to rise

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Magellan Financial Group Ltd (ASX: MFG) share price is outperforming the S&P/ASX 200 Index (ASX: XJO) today. At the close of trade today, Magellan shares are up 0.88% to $48.40. That is a significant departure from the broader ASX 200 Index, which ended the day in the red with a loss of 0.3% to 6,968 points.

Today's move is the latest in what has been a pretty good month to hold Magellan shares. Since 9 March, the Magellan share price is up close to 15%. However, saying that Magellan is still in the red for 2021 so far. Since the start of the year, Magellan shares are down 8.7% on today's pricing.

So why are Magellan shares outperforming today?

A young woman wearing a silver bracelet raises her sunglasses in amazement, indicating positive share price movement in jewellery shares.

Image source: Getty Images

Magellan share price supported by FUM?

A large contributing factor to Magellan's share price performance today could be its performance numbers released last week. On Friday morning, Magellan reported that its funds under management (FUM) swelled by close to $6 billion to $106.05 billion over March, up from the $100.61 billion that we saw at the end of February. 

Most of these gains were from market appreciation, considering that net inflows only made up $206 million of this FUM appreciation. Of this $206 million, $221 million came from institutional investments, with retail investments contributing a net outflow of $15 million. 

Over the quarter ending 31 March, Magellan also saw net inflows of $1.12 billion.

As my Fool colleague reported on Friday, the initial reaction from investors on this news was to hit the sell button. Indeed, Magellan share price lost more than 2% on Friday. But perhaps that was a reaction to the AstraZeneca COVID vaccine problems that were the talk of the town that day rather than Magellan's figures. By extension, perhaps today's share price moves are a delayed reaction from investors on that front.

But Magellan shares may also be benefitting from the current state of the US share markets. Magellan's largest funds, such as the Magellan Global Fund (ASX: MGF), are predominantly invested in US shares such as Starbucks Corporation (NASDAQ: SBUX) and Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL). On Friday afternoon (US time), the S&P 500 Index (INDEXSP: .INX) closed at its highest level in history. That can't be a bad thing for Magellan.

Whatever the root cause, Magellan shareholders will no doubt be happy with today's market moves. At the current share price, Magellan has a market capitalisation of $133.25 billion.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Magellan High Conviction Trust, and Starbucks. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Starbucks and recommends the following options: short April 2021 $110 calls on Starbucks. The Motley Fool Australia has recommended Alphabet (A shares) and Starbucks. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Financial Shares

A man surrounded by huge piles of paper looks through a magnifying glass at his computer screen.
Financial Shares

2 beaten-down ASX financial stocks worth a closer look

Falling share prices, rising fundamentals. Are these financials mispriced?

Read more »

Businesswoman holds hand out to shake.
Financial Shares

How high does Macquarie think this ASX 200 stock will go after its wealth sale?

This financial stock is a bargain, if the team at Macquarie are right.

Read more »

A shocked man holding some documents in the living room.
Financial Shares

IAG shares jump 12%: Buy, sell or hold?

Here's what the experts are tipping next.

Read more »

Worried woman calculating domestic bills.
Financial Shares

Pepper Money shares plunge 10% after Challenger slashes takeover offer

The revised proposal comes just over a month after the original takeover approach sparked a strong rally in Pepper’s share…

Read more »

Red buy button on an Apple keyboard with a finger on it.
Broker Notes

3 reasons to buy QBE shares today

A leading analyst expects QBE shares to outperform. Let’s see why.

Read more »

Two hands being shaken symbolising a deal.
Financial Shares

This ASX financial stock just struck a $500 million deal

Perpetual enters a deal to sell its wealth business to Bain Capital.

Read more »

Person pointing finger on on an increasing graph which represents a rising share price.
Financial Shares

A leading investor just bought these ASX 200 shares for income and growth

These businesses have been chosen as top buys right now.

Read more »

A woman in a red dress holding up a red graph.
Financial Shares

Macquarie says this major fintech stock can rocket almost 100%

The signs are looking good for future growth.

Read more »