International equities manager Magellan Financial Group Ltd (ASX: MFG) crashed around 5.2% to $18.89 today after it revealed net institutional outflows of $73 million to the market. There's no disguising the fact that losing institutional business is disappointing for any fund manager but it certainly comes with the territory.
Institutional investors will withdraw mandates or redeem funds for a variety of reasons and today's news appears little more than the normal course of business for any fund manager that is growing into a decent size. Magellan has just $35.3 billion under management and as it grows over the years is likely to experience plenty more institutional redemptions.
The market's reaction to sell the stock down more than 5% appears short sighted though as this is a business still cranking the retail FUM flows, with plenty of opportunity to win big institutional mandates globally. Overall net FUM inflows were $64 million and if April's slender growth proves an exception, today's selling price of $18.90 looks an opportunity in my opinion.
Of course if the institutional reversal is a sign of things to come, then the stock price will come under heavy pressure, but I doubt that to be the case. Other international equities managers to interest investors include Platinum Asset Management Limited (ASX: PTM), Henderson Group plc (ASX: HGG) or BT Investment Management Ltd (ASX: BTT).
In my opinion this looks a hiccup and Magellan remains a buy, although smart investors should always be fully prepared for a market downturn….
