The Magellan Financial Group Ltd (ASX: MFG) share price surged to a record high this morning as this fund manager becomes the envy of the industry.
Volatile markets and the big crash we suffered in the last few months of 2018 has done little to impact on the earnings performance of Magellan when the returns from the vast majority of fund managers suffered.
The MFG share price surged 6.6% on the news to $31.15 at the time of writing to become the fourth best performing stock on the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index after the Breville Group Ltd (ASX: BRG) share price, Cleanaway Waste Management Ltd (ASX: CWY) share price and Tassal Group Limited (ASX: TGR) share price.
Star pick of the sector
Magellan, which was co-founded by star stock picker Hamish Douglass, posted an impressive 35% increase in average funds under management to $72.1 million as net profit jumped 225% to $173.5 million in the six months ended December 2018.
The international fund manager increased its interim dividend by two-thirds to 73.8 cents per share as a result and management is crediting its strong investment performance during the trying period for the robust report.
Its stock pickers must have managed to dodge many of the potholes in the last four months of calendar 2018 and the company has been rewarded with a 346% increase in performance fees to $42.7 million.
Performance fees are only paid to fund managers who deliver above their benchmarks.
Foolish takeaway
The result is even more impressive considering that institutional net inflows had halved to $887 million in 1HFY19 although retail net inflows grew to $475 million in the period compared to $331 million in 1HFY18.
The Magellan share price has outperformed its peers by a country mile too. The stock has gained 26% over the past year when the Perpetual Limited (ASX: PPT) share price and Platinum Asset Management Limited (ASX: PTM) share price, which have 30% and 36%, respectively.
I suspect Magellan will continue to keep its edge over its peers in 2019 – barring any Black Swan events that could throw global markets into chaos.
