The worst case is a grossed up 7% yield at the average $20 I paid. Don't you think the market is a bit preemptive that FUM stagnates or falls? Inflation is upon us and investors will rotate to value as CB's attempts to put a leash on it. This will create demand for value investing which is at the heart of Magellan. I'm not saying this is risk free, but I found MFG quite attractive at circa $19 and offered an alternate strategy in my portfolio, albeit a small position. The performance of Magellan products is not that poor over the medium to long term. So why would you change providers?
SJP is on record as wanting to have a more active role in their investments. They have also stated they wanted to lower their fees for clients. I assume they are wanting to be a bit more competitive with index investing. SJP's also exited from BlackRock too as well as 4 other different managers back in early November. They removed Magellan only a few days ago and you have got to ask yourself why? IMO they looked at the MFG product performance and couldn't make up their mind. I think the way they exited tells me others will likely not follow. My other thinking is that you need to be a certain size to do in house investment. While I don't have a full list of MFG entities with FUM the ones I know of don't look big enough to go it alone yet.
Like most, I will be watching in case I am wrong.
MFG Price at posting:
$21.21 Sentiment: Buy Disclosure: Held
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