The Magellan Financial Group Ltd (ASX: MFG) share price has come under pressure on Thursday.
In morning trade the fund manager's shares are down 5.5% to $48.20.
Why is the Magellan share price under pressure?
Investors have been selling Magellan's shares this morning following the release of its half year results.
For the six months ended 31 December, Magellan reported a 9% increase in its average funds under management (FUM) to $100.9 billion.
However, due to a sharp decline in performance fees, this couldn't stop the company from reporting a 4% decline in revenue to $320.17 million. During the half, management fees increased 8% to $309.35 million but performance fees dropped 70% to $12.4 million. Service fees also fell 15% and interest and other revenue fell 190%.
On the bottom line, the company posted a 2% decline in adjusted net profit after tax down to $213.1 million.
Positively, despite the profit decline, the company's board elected to increase its interim dividend by 5% to 97.1 cents per share.
Management commentary
Commenting on the half, Magellan's CEO, Brett Cairns, said: "Magellan had a busy first half with the completion of a number of important initiatives including the restructure of our global equities retail funds, the launch of the Magellan Sustainable Fund and the MFG Core Series and principal investments we made in Barrenjoey Capital Partners, FinClear Holdings Limited and Guzman y Gomez (Holdings) Limited."
"During the period, the Group saw a 9% growth in average funds under management to $100.9 billion. We are pleased with this outcome, particularly given the severe market volatility seen around the world driven by the COVID-19 pandemic and the headwind of the rising Australian dollar."
"For the half year ended 31 December 2020, the Group reported net profit after tax of $202.3 million, which represents an increase of 3% over the previous corresponding period. We are pleased to announce the 5% increase in the interim dividend to 97.1 cents per share which reflects the increase in the underlying profitability of the funds management business before performance fees," he concluded.
