Because FUM is a product of both flows and performance.
Given Magellan have stated this crisis, as well as in the GFC their main focus is protecting investor capital on the downside, we should expect in this period lower absolute performance. Magellan, add value by lowering downside risk and outperforming indexes on the upside.
Give their large cash holding, it's clear until that capital is deployed we will see lower FUM growth. However, as long as inflows continue and Magellan deploy that capital opportunistically the FUM growth will increase significantly.
At this juncture my main focus is flows, as you point out performance has been flat, but flows have continued. For that reason I don't think simply looking at FUM is instructive for medium and long term growth for the business.
MFG Price at posting:
$58.98 Sentiment: Buy Disclosure: Held
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