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Magellan share price on watch after latest FUM update

The Magellan Financial Group Ltd (ASX: MFG) share price will be on watch again on Friday following the release of its funds under management update for the month of September.

According to the release, Magellan continued its positive form again last month and reported further fund inflows.

Over the 30 days Magellan experienced net inflows of $462 million, which included net retail inflows of $175 million and net institutional inflows of $287 million. This left it with total funds under management of $92,072 million, comprising $24,306 million of retail funds and $67,766 million of institutional funds.

It is worth noting that this does not include the $862 million it raised for the Magellan High Conviction Trust on Thursday. Those funds will be included in Magellan’s funds under management in October.

What is the Magellan High Conviction Trust?

This new trust was announced in August and will invest in a concentrated portfolio of high quality global companies, weighted towards its best ideas.

It aims to replicate the investment strategy of the unlisted Magellan High Conviction Fund which has returned a solid 16.6% per annum net of fees since its inception in July 2013.

According to yesterday’s announcement, its units are expected to be allotted on October 8 and holding statements are expected to be despatched on the same day. After which, the trust is expected to begin trading on the ASX on Friday October 11.

Given the success of Magellan’s other trust, Magellan Global Trust (ASX: MGG), I can’t say I’m surprised with the strong demand it experienced and the sizeable funds it raised from investors for the high conviction offering.

Ultimately, I feel this bodes well for its funds under management and performance fees over the coming years, potentially making Magellan a share to buy. I would choose it ahead of rival Platinum Asset Management Ltd (ASX: PTM).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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