GQG Partners (ASX: GQG)
Thoughts on GQG after lower FUM? Is this pricing overdone?
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Answer
Hi David,
The market and MM didn’t like GQG’s FUM update on Friday which showed a significant deterioration across all metrics. GQG’s August update showed funds under management (FUM) falling to US$149.2bn, down 4.6% from US$156.4bn in July and 11% from US$167.6bn a year earlier. The deterioration reflects a combination of continued client redemptions and weaker investment performance, with the shares falling to a record low as investors remain focused on when flows will stabilise.
- Outflows remain the key concern: Net outflows were US$4.3bn in August, following US$4.5bn in July, marking a second consecutive month of heavy redemptions and showing little sign that pressure is easing.
- FUM continues to head south: Total FUM has fallen 11% year-on-year to US$149.2bn, with International Equity at US$68.6bn and Global Equity at US$34.4bn. Lower FUM ultimately translates into a weaker fee and earnings base if the trend persists.
- Sentiment remains fragile: The stock hit a record low following the update, with the scale of the move clearly company-specific rather than simply reflecting broader financial-sector weakness.
MM Take: The key issues for GQG remain investment performance and stabilising client redemptions. With more than US$8bn of net outflows across July and August alone, investors are likely to require clear evidence that the worst of the redemption cycle has passed before a meaningful re-rating of the stock.
- We have no interest in averaging our position, we are more likely to take the loss.
