Why the Magellan (ASX:MFG) share price outperformed today

The Magellan Financial Group Ltd (ASX: MFG) share price is outperforming the S&P/ASX 200 Index (ASX: XJO) today. At the time of writing, Magellan shares are up 0.88% to $48.40. That is a significant departure from the broader ASX 200 Index, which looks set to end the day in the red with a current loss of 0.3% to 6,968 points.

Today’s move is the latest in what has been a pretty good month to hold Magellan shares. Since 9 March, the Magellan share price is up close to 15%. However, saying that Magellan is still in the red for 2021 so far. Since the start of the year, Magellan shares are down 8.7% on today’s pricing.

So why are Magellan shares outperforming today?

Magellan share price supported by FUM?

A large contributing factor to Magellan’s share price performance today could be the performance numbers the company released last week. On Friday morning, Magellan reported that its funds under management (FUM) swelled by close to $6 billion to $106.05 billion over the month of March, up from the $100.61 billion that we saw at the end of February. 

Most of these gains were from market appreciation, considering that net inflows only made up $206 million of this FUM appreciation. Of this $206 million, $221 million came from institutional investments, with retail investments contributing a net outflow of $15 million. 

Over the quarter ending 31 March, Magellan also saw net inflows of $1.12 billion.

As my Fool colleague reported on Friday, the initial reaction from investors on this news was to hit the sell button. Indeed, Magellan share price lost more than 2% on Friday. But perhaps that was a reaction to the AstraZeneca COVID vaccine problems that was the talk of the town that day, rather than Magellan’s figures. By extension, perhaps today’s share price moves are a delayed reaction from investors on that front.

But Magellan shares may also be benefitting from the current state of the US share markets. Magellan’s largest funds, such as the Magellan Global Fund (ASX: MGF) are predominantly invested in US shares such as Starbucks Corporation (NASDAQ: SBUX) and Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL). On Friday afternoon (US time), the S&P 500 Index (INDEXSP: .INX) closed at its highest level in history. That can’t be a bad thing for Magellan.

Whatever the root cause, Magellan shareholders will no doubt be happy with today’s market moves. At the current share price, Magellan has a market capitalisation of $133.25 billion.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Magellan High Conviction Trust, and Starbucks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Starbucks and recommends the following options: short April 2021 $110 calls on Starbucks. The Motley Fool Australia has recommended Alphabet (A shares) and Starbucks. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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