Both GQG Partners Inc (ASX: GQG) shares and Magellan Financial Group Ltd (ASX: MFG) shares have seen some pain in the last few months. Are either of them an investment opportunity?

These companies both operate in funds management – they look after client money by investing on their behalf, largely in global shares.

While they may seem somewhat similar, I'd describe them as being in different phases of their journey.

After rapid growth until COVID-19, Magellan was one of the hottest managers around, thanks to its investments in US blue-chip shares like Alphabet, Meta Platforms, Microsoft, Yum! Brands and a few others.

However, underperformance during the COVID-19 period due to being too defensive and also picking some Chinese stocks (which went through pain) led to tens of billions of client outflows.

GQG, on the other hand, has delivered long-term outperformance with its funds and also attracted significant inflows. At the end of December 2024, the business had funds under management (FUM) of US$153 billion.

So, are either Magellan shares or GQG shares a buy right now? Here's my 2 cents.

Magellan shares

The Magellan share price has plunged almost 20% since 29 January this year following its announcement of investment team changes. The fund management team is key to delivering investment performance and attracting/retaining client FUM, so a change can cause uncertainty.

Magellan told investors that Gerald Stack would step down from his role as head of investments after 18 years. Stack has led the listed infrastructure team since 2008 and has been the head of investments for more than a decade. He will "take some time off before pursuing his next opportunity."

The loss of Stack is a blow, and it makes me wonder what plans he has in the future.

On the positive side of things, the company's January 2025 update showed its FUM rose around $500 million to $39.1 billion, with both retail and institutional flows being flat for the month. Considering most months of the last two years show outflows, a flat net flow is a pleasing positive.

Looking at the valuation, according to the forecasts on Commsec, Magellan is trading at 10.5x FY25's estimated earnings with a possible grossed-up dividend yield of 6.7%, including franking credits.

If it can deliver flat or positive net inflows in 2025 and beyond, this could be an intriguing investment for a contrarian investor. But even if it goes well, I wouldn't expect this to be a straightforward recovery.

GQG shares

GQG went through volatility after its investments in Adani businesses fell under the spotlight.

However, aside from that, its investment record has been impressive, in my view.

The business did see net outflows in December 2024, but it saw positive net flows in the three months to December 2024. Time will tell if this is a one-off blip or the start of ongoing outflows for GQG.

For me, the best thing GQG can do to help retain existing FUM and attract new FUM is to deliver pleasing investment returns for its clients. Its track record at doing this makes me think it can continue to outperform over the long term.

In the 2024 calendar year, its FUM rose by 27% while net inflows were US$20.3 billion (double what 2023 saw).

While the GQG share price has risen well over 20% since 13 January, as the chart below shows, I still think this could be a good time to invest in the business while the market still isn't pricing it for much growth.

According to projections on Commsec, it's valued at just 9.5x FY25's estimated earnings with a possible dividend yield of 9.5%.