After rallying 65% in the past 12 months to touch a new all-time high many investors will quite reasonably be pondering whether there are further gains ahead for leading Australian-based global equity and infrastructure investor Magellan Financial Group Ltd (ASX: MFG).
Here are three reasons to hang on to your Magellan shares…
Keen focus on clients and advisors
While some fund managers may pay little attention to business development, Magellan's team is focussed on clients and their advisors. As the company states, they aim to provide excellent service and deliver investment results consistent with Magellan's objectives to deliver trust.
This focus has led to growth in staff numbers over the past 15 months with Magellan well positioned to benefit from compulsory superannuation trends with established relationships with over 500 independent financial advice firms and strong relationships and representation across four of the six major aligned advisor firms.
Plenty of room for more FUM
As a global investor with a focus on investing in the biggest and the best global companies, Magellan is not yet constrained by size. That's a great situation to be in considering Magellan added $12.9 billion to its funds under management (FUM) over the course of the financial year 2015! As at the end of September, FUM stood at $38.7 billion – with a major highlight being the growth in inflows from North American institutional clients.
Solid outperformance
Over the past one, three, five years and since inception time frames Magellan's two flagship funds have outperformed their respective benchmarks. Performance metrics such as this are difficult to achieve and are of course vital to the ongoing success of the business.
Valuation
With a long runway of growth ahead and trading on a trailing price-to-earnings ratio of 21.4x (according to data supplied by Morningstar) the stock doesn't look richly priced relative to its peers such as Platinum Asset Management Limited (ASX: PTM) which although on a slightly lower multiples would not appear to have the same business momentum.
