Magellan chairman Hamish Douglass warns there is a real and largely unrecognised risk hanging over the equity market that mutations of COVID-19 evade the protection of vaccines, bringing back volatility in a world where “there is very, very little margin for error”.

“The mutation risk is very real here,” the fund manager said on Thursday after Magellan Financial Group reported a 3 per cent increase in net profit to $202.3 million. The stock was down 4 per cent in afternoon trading (AEDT) to $49.05; Magellan raised $275 million in 2019 at $55.20 a share.