You’re betting as follows: 1. CEO review completed by October will not include a fee reduction of approximately 50 basis points to match ETF’s and larger global fund managers for retail investors. 2. FUM stays constant on average for 12 months, therefore no more outflows or at least performance increases matching outflows. 3. For second half NPAT to stay the same, average FUM needs to increase to $75.597B.
Average FUM for year was $94.2B. First half average FUM was $107.716B and second half was $75.597B.
If you think FUM average stays at $60B, then you should factor in an earnings reduction of approximately 25% to the earnings you have calculated.
If you think a reduction in retail fees is possible, a further reduction should be considered. Personally I think fee reduction will be to 0.95% or approximately a 25% reduction. This will be enough to retain current investors in Magellan Funds.
These are some additional downside risks to consider before betting. I am sure there are some upside points you could consider in taking your bet too.
Best of Luck Lost
MFG Price at posting:
$13.79 Sentiment: None Disclosure: Not Held
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