This week GQG reported FUM of $156.0bn as at June 30, 2026, down 4.5% month-on-month, and down 9.5% year-on-year from $172.4bn at June 2025. Net outflows of $3.2bn in June were the largest monthly outflow in 2026, marking 12 consecutive months of net redemptions a significant redemption cycle for a business whose revenue is almost entirely management-fee driven. Like all fund managers, GQG generates earnings from the money it manages, and as this falls, so does the company’s profitability, but with the stock trading ~20% below its long-term valuation, it’s priced for more bad news, and too pessimistically in our opinion, assuming it can stem the outflows.
Performance has been the primary reason for the outflows:
- A structural underweight to technology and AI-related stocks proved costly for GQG, with the AI-fuelled rally of 2024–25 rewarding momentum over traditional valuation disciplines.
We feel GQG has almost become a hedge against the “AI Trade”, but the market hasn’t agreed over recent times despite its ~10% forecast yield. Interestingly, while GQG has been openly sceptical of the AI trade, its rhetoric has become noticeably more pragmatic, with management now signalling a willingness to adjust exposures as opportunities arise—reflected by the rapid increase in tech holdings, including Nvidia becoming its second-largest position (5.8%) in early July, suggesting a shift from outright scepticism to selectively “renting the bubble.”
- It will be interesting in August when GQG delivers its half-year result to see if GQG added to its AI exposure during the recent volatility.
Rajiv Jain’s portfolios made money even as clients were pulling it, but at a rate insufficient to fully offset the exodus. For a firm running 77% operating margins charging ~48 basis points, every billion in net outflows is a direct hit to the bottom line and for now, the stock needs the below chart to show some blue, or at least less red.
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GQG Partners Inc (GQG) Net In/Outflows – Source Bloomberg
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GQG Partners Inc (GQG) Net In/Outflows – Source Bloomberg
The numbers tell the story; the $25.2bn in cumulative outflows represents an annualised drag of roughly $96m on annualised EBITDA and $71m on net income, equivalent to approximately 15% of FY2025 net income, but over the same period the stock has fallen over 40% before taking into account dividends. This is partially offset by market appreciation on remaining FUM, but the structural revenue erosion is significant given GQG’s relatively high fixed-cost base relative to its fee income. GQG’s undemanding valuation is no surprise – trading on just 6.7x. It’s clearly priced for ongoing outflows and the first sign this is abating will likely see a 20-30% rerating in the blink of an eye.
- We believe GQG still presents an attractive defensive play helped by its ~10% div yield.
NB: GQG was downgraded to sell this morning by Goldman Sachs – although their target price is inline with the current share price ($1.40)
MM is long and cautiously bullish GQG ~$1.40
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