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Can anything stop Magellan shares in 2020?

Kenneth Hall
rocket shooting higher

Magellan Financial Group Ltd (ASX: MFG) shares have charged higher today after reporting an increase in funds under management (FUM).

What did the ASX wealth manager report today?

The Aussie wealth manager reported net inflows of $414 million for January 2020. Magellan saw $156 million in net retail inflows and $258 million in net institutional inflows.

The Magellan share price climbed 1.38% higher today on the back of the strong increases. The group’s Global Equities, Infrastructure Equities and Australian Equities all saw strong flows during the month.

How have Magellan shares performed recently?

The Aussie wealth manager has delivered for shareholders in recent years. Magellan shares are up 36.25% in the last 2 months on the back of strong results like today’s inflow announcement.

Magellan has taken a 10-year bull market and made the most of it by generating strong returns for shareholders. Since the start of 2019, the group’s shares have rocketed 192.22% higher.

However, it’s always good to be skeptical of strong share price performance. That’s particularly the case when Magellan shares are seeing gains from the investments business.

Magellan has a solid track record but the key is whether or not that can be replicated in the downturns as well as the good markets. Magellan CIO Hamish Douglass has also proven his ability to beat the market in a downturn previously.

Without going short, a strong investment manager can still protect a portfolio’s downside with more defensive allocations. That could be in the form of defensive assets like gold or non-cyclical sectors like Energy.

Foolish takeaway

Magellan shares could keep climbing, or they could be under pressure when the bad times hit.

The key to any financial investment is picking where the value is and trusting your asset allocation and security selection.

If you think that Magellan and its investment team can continue to deliver alpha to investors, Magellan shares could be a good buy in 2020.

However, a more bearish investor might look at AGL Energy Limited (ASX: AGL) or Northern Star Resources Ltd (ASX: NST) instead.

The post Can anything stop Magellan shares in 2020? appeared first on Motley Fool Australia.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020