It shows the current trend is down and to watch future FUM releases for signs of stability or continuing losses. This is Fund Managers core business and needs to be monitored based on trend.
Will Magellan grow FUM again? Likely, but is currently in the emergency room. Losing FUM is unhelpful and if an investor puts money into Fund they are likely to lose money not gain. How will Magellan management convince investors to continue to invest in funds?
Will Magellan stabilize FUM? Answer is yes, but at what cost? I believe Global Equity FUM will stabilise when it hits $20B (current quarter on trend to lose $25B in FUM and will be $20B by June 2022 if current trend continues and Magellan do not lower fees). Magellan will definitely lower fees by June and reduce staff cost when FUM reaches this level. They will lower fees due to competition and wanting to build FUM back up.
The question I would ask around FUM is, will Magellan grow to such heights of $100B FUM again? The answer to that question is highly unlikely. This would mean share price not likely to return to previous heights.
Is Magellan a dying stock? No, it has just matured from high growth stage and will experience lower growth once stabilisation has occurred, with lower margins/earnings.
Best of Luck Lost
MFG Price at posting:
$14.20 Sentiment: None Disclosure: Not Held
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