The Magellan Financial Group Ltd (ASX: MFG) share price has surged a whopping 140% so far this year to be a top performer in the S&P/ASX 200 (INDEXASX: XJO) index – but is it better than the 'Big Four' ASX banking stocks?
What has driven the Magellan share price higher?
The Magellan share has been outperforming so far this year and is currently trading at $56.55 per share, despite falling 4.88% in yesterday's trade.
While the likes of Challenger Ltd (ASX: CGF) have struggled in the last 12 months on weaker investment income and lower yield on its numbers, Magellan has been the top performing ASX wealth manager so far this year.
Led by co-founder and CEO Hamish Douglass, Magellan has posted strong investment returns and capitalised on the ASX's best start to the year since 1991.
Magellan's meteoric rise has been even more impressive given the negative impact of the 2018 Financial Services Royal Commission on the financial sector, and the bounce back in 2019 has been built on strong half-year results in February 2019.
Magellan posted adjusted net profit after tax (NPATA) up by 62% from 1H 2018 to $175.3 million in 1H 2019, largely driven by dramatic funds under management (FUM) growth and growth in fee revenue.
As we lead into the August 2019 reporting season, another strong results showing could see Magellan surge even higher and be the top performer in the ASX 200 in 2019.
What about ASX banking stocks?
While Magellan has outperformed its fellow wealth managers, its share price has also been surging ahead of even the top ASX banks.
Commonwealth Bank of Australia Ltd (ASX: CBA) has seen its share price climb 14.6% higher in 2019 to deliver the best returns amongst the Big Four banks, meaning Magellan has delivered 10 times the capital gains of even the best ASX bank.
The other banks have largely struggled to post gains so far this year as National Australia Bank Ltd (ASX: NAB) slashed its dividend in May and Westpac Banking Corp (ASX: WBC) reported net interest margin (NIM) compression in its half-year results.
At present, Magellan looks like a better value buy than the Big Four but I'd be watching for August results to see which way the financials sector is heading before diving in.
