At the turn of the month, we Fools like to take a look at some prominent S&P/ASX 200 Index (ASX: XJO) shares to see how they performed over the month that was. We’ve already looked at some of the ASX’s biggest blue chips today. But it’s time to check out the Magellan Financial Group Ltd (ASX: MFG) share price.
Magellan is a major company in the ASX financials sector. It’s also the largest funds management business on the ASX. But Magellan has not had a fantastic year or so. Over the past 12 months, the company has gone from around $58.50 per share to today’s price (at the time of writing) of $47.80 – a slide of around 18%.
But let’s talk May.
Magellan shares started last month at a price of $48.50. Yesterday, the company closed at $47.91. This means Magellan gave up 1.22% over the month. That doesn’t look great when you compare it against the broader ASX 200. The index ended up putting on a healthy 1.9% gain for May, which included making a couple of all-time highs over the month. As such, the Magellan share price underperformed the index by more than 3% in May.
So why did Magellan undershoot the index?
Well, things didn’t start out too well for the fund manager. As my Fool colleague James Mickleboro covered on 6 May, investment bank Goldman Sachs reiterated a ‘sell’ rating on Magellan with a 12-month price target of $47.97 per share. Not exactly what investors like to hear.
Negative broker attention seems to have weighed down some other, arguably more positive, announcements the company made over the month. The first of these was the funds under management (FUM) disclosure Magellan announced to the markets on 7 May for the month of April. Magellan told investors its total FUM as of 30 April was $110.43 billion, which was up a robust 4.1% from the $106.05 billion in March.
Then, on 27 May, we also got some much-awaited news out of Magellan regarding a new retirement-focused product – FuturePay. Incidentally, this is scheduled to launch on the ASX this week. FuturePay will invest in a global portfolio of shares, much like Magellan’s flagship Magellan Global Fund (ASX: MGF). However, it will be targeting an initial yield of 4.3% per annum, which will be paid out monthly. It will also be adjusted over time for real returns over inflation.
But investors didn’t seem to respond too enthusiastically to this announcement, or indeed Magellan’s boost in FUM over April. At the current Magellan share price, the company has a market capitalisation of $8.78 billion, a price-to-earnings (P/E) ratio of 21.5 and a trailing dividend yield of 4.62%.