A nice little bounce back above $40 today. Well done to those...

A nice little bounce back above $40 today. Well done to those that pounced on MFG at the ‘stupid oversold’ point of $38/$39.

As many who follow the markets would know, this is an historically volatile time of the year. There is a little nervousness in the markets right now - a 5 to 10% correction is long overdue.

This wouldn’t be the worst thing for MFG.

Hamish has set up many of the Magellan funds with a defensive element that would ride out a market downturn comparatively well. At the moment MFG returns are constantly compared to other funds that have invested aggressively in a rising market - many with no real safety net. In the ‘risk on’ environment this has paid off.

But as the disclaimer always states at the end of advertisements featuring financial products :

’past returns are not indicative of future performance’

The biggest sucker play you can fall for right now is to throw your money into the new and shiny fund that returned 30% last year.

It is true that Hamish made a few wrong calls last year. He went defensive a bit early and missed riding some big rebounds and he got into Chinese tech which unravelled. Most Magellan investors will forgive him for that - they were not altogether stupid moves at the time....so I’m just not convinced that the FUM outflows will occur to the extent some are forecasting.

Given the mix of investments across the Magellan funds I’m happy it’s a mix for all seasons and in time they will return to the top of the ‘league tables’ This, in turn, will see greater FUM inflows and together with the new MFG partnerships beginning to pay their way should have the MFG sp grinding back into the $50’s and $60’s

If there Is a market correction an already beaten down MFG share price would be taken down with it of course .....but I would welcome this as an extraordinary opportunity to buy. Keeping a bit of cash in the top draw for that.