The Magellan Financial Group (ASX: MFG) share price is roaring in early trade on Thursday after the fund manager posted its FY24 results.
At the time of writing, Magellan shares are fetching $10.31 apiece, more than 6% higher from the open.
This rally follows a solid FY24 performance, with the company reporting strong profit growth and its highest performance fees in years.
Let's see what the company posted.
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Magellan share price rallies on solid FY24 results
Key takeouts from the year include the following:
- Statutory net profit after tax (NPAT) grew by 31% year over year to $238.8 million
- Funds under management (FUM) reached $36.6 billion as of 30 June 2024, down 25% year over year
- FUM had climbed to $38.4 billion by 31 July 2024
- Performance fees were $19.2 million for the year, "the highest since FY21"
- Declared a final dividend of 28.6 cents per share (cps)
- Also declared a performance fee dividend of 7.1 cps, 50% franked
What else happened in FY24?
Magellan made significant moves throughout the year to restore stability and prevent outflows from its investment funds. The Magellan share price is sensitive to fund flows, so this is an important measure.
FUM was down 25% year over year to $36.8 million despite institutional inflows of $600 million in Q4 FY24.
The company slashed its funds management operating expenses by 16%, bringing them down to $102.4 million.
Meanwhile, its performance fees of around $19 million are its highest in three years.
Magellan is an active fund manager that gets paid a performance fee. Higher fees are generally a sign of better performance of its investment strategies.
Magellan also announced a partnership with Vinva Investment Management, aiming to bring innovative investment products to clients. This may have an impact on the Magellan share price today as well.
It also announced a "fresh US distribution platform" as it extends its rollout there.
What did management say?
Magellan's Executive Chairman, Andrew Formica, emphasised the company's achievements:
"Our financial results reflect the resilience of our business following a challenging few years. As of 30 June 2024, our funds under management (FUM) stood at $36.6 billion, diversified across three high quality investment strategies, and rose to $38.4 billion as at 31 July 2024.
Net flows have continued to stabilise in both retail and institutional channels, and we have secured significant client wins. Particularly pleasing is seeing a return in the institutional channel, demonstrating the confidence new and existing clients retain in Magellan.
He also mentioned Magellan was focused on creating a more stable business:
Importantly, we addressed several legacy issues that have helped to restore stability to the business
and position us for future success. These include successfully implementing transitional leadership
arrangements, resolving the Employee Share Purchase Plan loans for our staff and introducing a new remuneration framework, as well as converting the Magellan Global Fund Closed Class into the Open Class.
What's next?
The company is now focused on "strategic objectives and growth" – in fact, the word 'strategic' was mentioned seven times in the release – whilst working on the performance of its strategies.
It is also committed to paying dividends:
While there is still work to be done, our financial position is strong, we have consistently generated
robust operating cashflows and are highly profitable. This resilience and strength enables us to continue paying attractive dividends to shareholders while also investing for the future.
Magellan share price snapshot
The Magellan share price is showing momentum on Thursday after the company's FY24 results.
It is up nearly 3% in the past year of trade, underperforming the S&P/ASX 200 Index (ASX: XJO) by 6% during that time.
