Magellan Reports 5.4% Profit Growth with $39.6bn AUM in FY25
Magellan Financial Group reported a solid FY25 with an 8.2% rise in assets under management and a notable surge in strategic partnership income, offsetting a dip in investment management revenue.
- Assets under management grew 8.2% to $39.6 billion
- Operating profit increased 5.4% to $159.7 million
- Strategic partnership income soared 202% to $31.1 million
- Investment management revenue declined 12% due to fee pressure
- Total shareholder returns up 64%, including a 73.3 cents per share dividend
FY25 Financial Highlights
Magellan Financial Group (MFG) delivered a resilient FY25 performance, with assets under management (AUM) rising 8.2% year-on-year to $39.6 billion. Operating profit increased by 5.4% to $159.7 million, supported by a remarkable 202% jump in income from strategic partnerships to $31.1 million. This growth helped offset a 12% decline in investment management revenue, which was pressured by lower average management fees despite the increase in AUM.
The company returned $202.1 million to shareholders, a 64% increase from the prior year, including a fully franked dividend of 73.3 cents per share, up 12.6%. Additionally, Magellan completed an on-market share buy-back worth $74 million, reflecting strong capital management and confidence in the business.
Strategic Partnerships Drive Earnings Diversification
Strategic partnerships have become a key growth driver for Magellan. The acquisition of a 29.5% stake in Vinva Investment Management in August 2024 significantly boosted partnership income. Alongside Barrenjoey Capital Partners and FinClear Holdings, these partnerships contributed 20% of total operating profit, underscoring Magellan’s successful diversification beyond traditional investment management fees.
Barrenjoey Capital Partners reported strong revenue growth, particularly in fixed income, supported by new offices in Abu Dhabi and Hong Kong. Vinva’s systematic equity funds gained traction, with $1.7 billion in AUM and positive client flows. These partnerships not only enhance earnings stability but also expand Magellan’s footprint in key global markets.
Investment Management – Navigating Fee Pressure
While AUM increased, investment management revenue declined 12% to $245.7 million, reflecting a 9 basis point reduction in average management fees to 61 basis points. This was driven by a shift in asset composition towards lower-margin strategies and increased client rebates. Performance fees also fell sharply by 42%, although all funds delivered double-digit returns, with several outperforming their benchmarks.
Magellan’s investment teams launched new systematic equity funds and transitioned a fourth fund to the Vinva platform, signaling innovation and responsiveness to evolving client needs. The company continues to invest in AI tools and operational efficiencies to support future growth and maintain competitive performance.
Capital Management and Future Priorities
Magellan ended FY25 with $563 million in liquid capital, including cash and fund investments, and no debt. The company’s dividend policy was updated to target at least 80% payout of group operating profit from FY26 onwards, reflecting the growing contribution from strategic partners.
Looking ahead, Magellan plans to leverage its global distribution platform to attract new clients, expand product offerings, and pursue additional strategic partnerships. The focus on fostering a high-performance culture and operational excellence, including AI adoption, aims to sustain growth momentum in a competitive market.
Bottom Line?
Magellan’s FY25 results highlight a strategic pivot towards partnership-driven earnings diversification, setting the stage for growth amid fee pressures.
Questions in the middle?
- How will Magellan balance fee compression with growth in lower-margin strategies?
- What new strategic partnerships might Magellan pursue to further diversify earnings?
- How will AI investments tangibly impact operational efficiency and investment performance?
