A few screenshots below to show my theory the management fee...

A few screenshots below to show my theory

the management fee over FUM ratio is pretty consistent. I suspect the annual management fees / FUM ratio is 055-06% because the FUM I am using is the end of year FUM and managements fees are accrued daily for most Magellan funds. With rising markets this will make the ratio lower than the aggregate annual fees on Magellan funds. In falling markets the ratio will likely be higher.

If you multiply 0.55% with 113b its 621 million which is consistent with the 2021 management fee figure of 631 million. But this 631m was derived from June 30 2020 to Jun 30 2021. Look at how much higher the MSCI index has got. The flagship Magellan benchmark is MSCI World ex Australia Index (AUD) but the below is basically the same.

In the 30 June 2021 to 30 June 2022 year Magellan is accruing management fees at market peaks & as the market is flat since June 30 2021 the management fee ratio will be higher on its FUM. If you multiply 0.65% times 113 billion is 734 million which is an extra 100m in the Magellan coffers (untaxed). Of course in falling markets FUM will be lower & so the multiplier wont be the same. Although strictly from an accounting point of view this is the best start to a financial year Magellan is having. Yet the stock price is having one of its worse times. I just feel if Magellan FUM remains stubborn and the major market indexes hold firm (or even rise) the market will have no choice but to reevaluate. Morningstar have a NP forecast of 500m which offers a forward PE ratio of 12. It would be less than 12 if you use the enterprise value as MFG has more cash than debt (one very small operating lease).

Do we even know if a longer term net outflow is forthcoming. Switching funds costs money - exposure to buy/sell spreads and capital gains tax. So there are reasons to buy and sell MFG, but at these prices MFG offers sheer outrageous value. Especially when Commbank is going at 21/22 times earnings. Even in times when its widely known banks ROE will be closer to 12% rather than 17%.