Ann: Funds Under Management - May 2022, page-80

Yes, the new investor mix makes investing at the current share price attractive. Back of envelope, it looks like $280m in base management fees for the trailing six months. In the future though, I'm not too sure. The retail mix is key for MFG since that is where the earnings really lie.

There isn't a lot of alternative safe investments for retail investors since there are bubble indexes everywhere and most retail investors lack the skill to professionally provide individual stock valuations nor ability to buy international stocks. So in theory, retail are unlikely to collectively pull all funds since there is a demand for such services. I get the feeling those currently exiting are the herd followers and the people who always choose the bottom to exit. Another 10-20 percent is possible though. Value investing is about the longer term horizons than the short term declines we are currently experiencing which is dragging down everything. Taking a peak inside the investments of Magellan, I see lots of businesses with pricing power, overall stable earnings and good to excellent balance sheets. It is just a matter of time for other investors to catch on.

The Magellan global fund was born in July 2007 at a time when the index halved in the next 12 months. The trailing 7,8 & 10-year returns for Magellan's global fund are not too bad at 10%pa net of fees. For that matter, the short term losses are not excessive either given the circumstances. I'm sure many more retail and institutional investors are sitting on paper losses greater than the Magellan NAV declines. It is only when you compare to indexes you suddenly see the underperformance. AND those indexes only outperformed in the last 5 years because you had so much retail money pouring into everything and idiot leaders at the helm. QE, low interest rates and COVID 19 are the main contributors to the biggest bubble we have ever seen. Value will return to investing favour as it has done after boom and busts before. For if value investing does not return, the world will continue to have a lot of financial problems.

As I said, there is not much choice for a retail investor. Do it yourself and risk massive losses as we are seeing now. I think BTFD is over as the cheap price and availability of money diminish. Thematic investing and managed fund such as Magellan is the only place to turn in these times for retail. And as said previously, who cares about the .28% management fee from institutional investors when retail are paying four times that. All that brand damage that Magellan suffered from a couple of investment houses trimming their costs was not actually worth it IMO.

MFG has a strong balance sheet and yes there is a decent ROI at $13 but the uncertainty of what the other retail and institutional investors do with their hard-earned cash creates uncertainty. I'm less convinced the MFG brand and value concept is over so I'm going to keep adding to my MFG holding until I see the contrary.