Magellan (ASX:MFG) share price falls 2% after investor warning

Why are Magellan shares falling today?
The post Magellan (ASX:MFG) share price falls 2% after investor warning appeared first on The Motley Fool Australia. –

The Magellan Financial Group Ltd (ASX: MFG) share price is under pressure today. Magellan shares are currently trading at $36.89 each, down 2.25% for the day so far. That’s a little worse than the broader S&P/ASX 200 Index (ASX: XJO), which is presently down 1.2% so far this Tuesday to 7,296 points.

So why is Magellan, one of the largest fund managers on the ASX, down again today?

Well, one possible reason has emerged. According to a report in today’s Australian Financial Review (AFR), Magellan is facing some pushback from one of its own investors. According to the report, the United Kingdom-based wealth manager St James’s Place represents around “one quarter of Magellan’s institutional funds under management [FUM]” and around 18% of its total FUM.

That’s according to research from broker Jarden. Jarden has revealed that St James’s Place has downgraded Magellan to “amber” under its ‘traffic light system’.

Jarden found that a St James review of Magellan’s mandate reported an “unfavourable concentration risk” with its current position. The report states that this is unlikely to result in St James pulling funds out of Magellan’s management. However, the amber light does reportedly prompt a concern of “specific areas for closer ongoing monitoring”.

It’s perhaps no surprise some investors may have gotten some cold feet with this news. Institutional funds are an essential component of Magellan’s business model. Earlier this month, we broke down Magellan’s most recent FUM figures, which showed that out of the $117.96 billion of FUM the company has, $86.44 billion (or 73.3%) came from institutional investors.

About the Magellan share price

Magellan used to be an ASX share with a growth reputation. As an example, the Magellan share price rose by roughly 150% between January 2019 and January 2020.

However, that reputation has suffered more recently. The company is down approximately 30% year to date in 2021 alone, and is also down by ~35% over the past 12 months. It also remains down by almost 50% from its early 2020 all-time high of roughly $74 a share.

At Magellan’s current share price, the company has a market capitalisation of $6.82 billion. It also has a price-to-earnings (P/E) ratio of 25.65, and a dividend yield of 5.7%.

The post Magellan (ASX:MFG) share price falls 2% after investor warning appeared first on The Motley Fool Australia.

Should you invest $1,000 in Magellan right now?

Before you consider Magellan, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Magellan wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

2 ASX 200 blue chip shares that might be the best to buy

The Magellan (ASX:MFG) share price just hit another 52-week low, down 17% in a month
What’s going wrong for the Magellan (ASX:MFG) share price lately?
Top brokers name 3 ASX shares to sell next week

The Magellan (ASX:MFG) share price hit a 52-week low this week. Do brokers think it’s a buy?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!