Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Dear James / Shawn, After such a disappointing update from MFG today, and a heavy fall in the share price, why did you not sell the MM holding ? Given the result and the falling markets, would it not have been better to cut the MFG holding, rather than risk further downgrades over the next few weeks and months? I think I read recently that cutting losers was your preferred plan this year. best wishes John.
Hi John,
A valid point, however if we circle back to our original thesis for buying MFG here we discussed our belief that better performance will ultimately drive better flows. We believed they were not priced for inflows and the value of their principle investments supports the valuation of the group – in other words, they were cheap with a path to redemption.
We know their performance has improved, and while it has not stemmed the outflows in June, we don’t think one data point is enough to render our thesis dead. Ultimately, better performance, will drive better FUM numbers, just the timing of that happening is the unknown. At time of writing, we’re down ~6% on our position in the growth portfolio, and ~1% in the income portfolio in a weak market that’s shed well over 2% on Thursday & Friday.
We intend to wait until FY23 results due out on the 18th August for more information.
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