Magellan Financial Group (ASX:MFG) reported interim results for the six months ended 31 December 2025, with management emphasizing continued execution of its strategy to diversify earnings, strengthen distribution, and maintain disciplined capital management.
Financial performance and capital management
CEO and Managing Director Sophia Rahmani said operating earnings per share rose 5% from the prior corresponding period to AUD 0.486. The company declared a fully franked interim dividend of AUD 0.395 per share, representing an 80% payout of operating profit under its revised dividend policy announced in August 2025. Rahmani said the interim dividend was up 50% compared with the same time last year.
Chief Financial Officer Dean McGuire said operating profit was flat for the period, with strong growth in strategic partner contributions offset by lower investment management revenue. Statutory profit fell 27% versus the prior period, which McGuire attributed primarily to mark-to-market movements on fund investments.
Investment management: fee pressure, stable AUM, mixed performance
MFG ended the period with assets under management (AUM) of AUD 39.9 billion, which Rahmani said represented net growth of 3.4% year-on-year and was roughly flat compared with 30 June 2025. She attributed flows to positive institutional inflows into Airlie Australian equities and global listed infrastructure, as well as retail inflows into Vinva Systematic Equity funds offered on Magellan’s platform, partly offset by continued retail-driven outflows in global equities.
McGuire said management fees declined 8% due to a 13% reduction in the average fee rate, partly offset by a 6% increase in average AUM. Base management fees averaged 55 basis points for the half, down 8 basis points from the first half of 2025, which he said reflected compositional changes in AUM, including outflows in higher-margin global equities products. The average run-rate management fee at period end was 54 basis points. In response to analyst questioning, McGuire said the fee-rate decline was “fairly linear” across the period and noted that a conversion of the High Conviction Fund to the Global Opportunities strategy contributed to a two-basis-point pricing drop that “won’t repeat going forward.”
On performance, Rahmani described outcomes as mixed. She said newer solutions, including the Magellan Global Opportunities Fund and Vinva Systematic Funds, had delivered strong performance and remained top quartile since inception. However, she said performance “is not where we would like it to be elsewhere across our product set,” calling it a key priority.
Rahmani said the Magellan Global Fund has met its stated objectives since inception and over longer time frames, but lagged the MSCI World Index over the last year in a market driven by growth and momentum, while the team remained disciplined in its quality-focused approach. In global listed infrastructure, she said six-month performance was modestly behind benchmark, while both strategies remained ahead on a gross basis over 12 months and aligned with a CPI+5% objective. She added the business retained a major sovereign wealth mandate and expanded another large institutional relationship during the half. In Australian equities, Rahmani said Airlie’s performance was impacted by underweights to “lower quality, highly leveraged companies and resource stocks, particularly gold,” and noted recent team additions.
Strategic partners drive a larger share of earnings
MFG repeatedly pointed to strategic partnerships as a growing and diversifying contributor to earnings. McGuire said MFG’s share of profit from strategic partnerships rose 109% to AUD 25.7 million, comprising 31% of operating profit for the half.
- Barrenjoey: McGuire said Barrenjoey’s revenue rose 45% versus the prior corresponding period and MFG received a fully franked AUD 8 million dividend, double the prior year. Rahmani added that Barrenjoey more than doubled NPAT to AUD 54 million on revenue of AUD 295.3 million, supported by growth across every business line. In Q&A, management emphasized operating leverage as a driver of profit growth as prior investments mature, while noting transaction timing can affect period-to-period outcomes.
- Vinva: McGuire said Vinva paid a fully franked AUD 9.8 million dividend during the period and that MFG’s share of income rose, supported by higher AUM over the past 12 months. Rahmani said the partnership was 18 months old and “gaining real traction,” with AUD 2.2 billion in AUM across the four Vinva funds on Magellan’s platform. In Q&A, management said Vinva had about AUD 43 billion under management at 31 December and had experienced subsequent inflows alongside a strong institutional pipeline. Rahmani also referenced additional jointly secured institutional mandates, including a second CFS mandate and a new overseas global equity mandate that was funded after December.
- FinClear: Rahmani said FinClear’s revenue rose 20% year-on-year, supported by growth in trade execution, FX revenues, and the FCX platform. She said its cash and FX platform is fully operational and FCX is ramping up following launch, including its first major transaction in the half.
Management also said it was considering additional disclosure around strategic partners, acknowledging investor feedback while noting the businesses are private and founder-led.
Expenses, AI investment, and second-half priorities
In response to questions on costs, management said expense growth in the first half was about 1% and reflected an ongoing focus on operational efficiency. McGuire said the company expects some expense growth in the second half as it invests in technology and other areas, but indicated full-year expense growth could come in below inflation and said there was “no change to the medium-term outlook.”
On artificial intelligence investments, McGuire said MFG is focused on two areas: tools to improve investment research effectiveness and expand coverage, and operational productivity improvements across the business, including client reporting and client experience. He said the company expects to fund these initiatives from the existing cost base, describing it as a reallocation rather than a driver of higher overall expense growth.
Looking ahead, Rahmani outlined second-half priorities including leveraging the global distribution platform to win new clients, broadening the client offering via strategic partnerships and organic development, continuing to assess partnership opportunities, building a high-performance culture, and strengthening the operating core. She said MFG remained “cash generative, capital disciplined, and well-positioned” to continue executing its strategy amid ongoing headwinds for active management.
About Magellan Financial Group (ASX:MFG)
Magellan Financial Group Limited is a publicly owned investment manager. It invests in global equities and global listed infrastructure markets across the globe. Magellan Financial Group Limited founded in 2004 and is based in Sydney, Australia.
