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Morningstar runs the numbers

Lewis Jackson  |  06 Sep 2021Text size  Decrease  Increase  |  
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Investors punished fund manager Magellan, sending its shares down 10% after it reported profits fell and outflows continued, writes Emma Rapaport: Magellan Financial Group's (ASX: MFG) underlying profit fell 6% to $412 million. Morningstar equity analyst Shaun Ler says profits were weighed by a 63% drop in performance fees, due to underperformance, and start-up costs for investment bank Barrenjoey. Investors didn't take the news well, sending Magellan shares down more than 10% on the day of the result. Magellan saw $351 million in net outflows in the June quarter. While this is a drop in the ocean for the $113 billion fund manager, it signals disquiet among some investors.

$8.4 billion

The Chinese communist party gave investors a lesson in risk management after new laws sent the tuition sector's market cap down more than 90% to $8.4 billion, writes Alec Lucas: "The edicts ended months of speculation that has crushed the share prices of New Oriental Education & Technology Group, TAL Education Group, and Gaotu Techedu (formerly GSX Techedu). Their combined market caps, which exceeded $100 billion in early 2021, fell to $8.4 billion by the end of July. Unless investors had taken some gains along the way, even those who held New Oriental or TAL for many years lost money."


Balanced investors should expect longer term returns around the 7% mark, according to the chief investment officer at Australian Super, I write: “Much of the juice has already been squeezed and even if rates don’t rise, investors must accept future returns will be lower, says Mark Delaney, chief investment officer at Australian Super, speaking at the Australian Institute of Superannuation Trustees annual conference Thursday. 'Our 15-year return is 7.2% while the 10-year return is 10%. The 15-year number is more realistic because it includes the financial crisis. So you’re getting numbers around 7 as the underlying base return.'”


Despite a disappointing end of year report and a share price tumble, Link chairman Michael Carapiet is backing the company to the tune of $556,250, I write: “In a possible signal of his commitment, Link chairman Michael Carapiet bought $556,250 worth of shares last Friday, the day after the company reported, according to a regulatory notice.”

Charts from last week - Link Holdings has a tumultuous year and interest rates set to be low for long.

Link Holding's share price fluctuates with the fortunes of rival takeover bids (here)

Global interest rates have declined since the 1980s and the Fed thinks they'll stay there (here)

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is a reporter and data journalist with Morningstar. Tweet him @lewjackk or get in touch via email

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