MNG half year results

[pyad]

Surprised nobody has mentioned MNG, a FTSE100 fund manager on a high yield that I featured here some time ago. Interim results out yesterday.

The interim dividend is 6.2 pence per share, up 1.6% on last year's 6.1p. This is in line with their policy of paying one third of the previous year's total dividend.

xd 18 Aug
pd 29 Sep

Rolling twelve month total div is 18.4p so at 222p the historical yield is a hefty 8.3% and will likely be fractionally higher on a forecast basis for 2022 since they raised the interim slightly.

It has a short record, being demerged by Prudential in October 2019, which might put off some but I've held it for a while in my HYP and have not been disappointed so far.

[kempiejon]

can be found here https://www.mandgplc.com/investors/resu ... sentations

[Dod101]

Surprised nobody has mentioned MNG, a FTSE100 fund manager on a high yield that I featured here some time ago. Interim results out yesterday.

file:///C:/Users/sb/Downloads/1614595.pdf

The interim dividend is 6.2 pence per share, up 1.6% on last year's 6.1p. This is in line with their policy of paying one third of the previous year's total dividend.

xd 18 Aug
pd 29 Sep

Rolling twelve month total div is 18.4p so at 222p the historical yield is a hefty 8.3% and will likely be fractionally higher on a forecast basis for 2022 since they raised the interim slightly.

It has a short record, being demerged by Prudential in October 2019, which might put off some but I've held it for a while in my HYP and have not been disappointed so far.

These were reported yesterday by Daveh.

Dod

[pyad]

But not on this board. I rarely look at the company news board so was not aware of Dave's post until now. It is an HY share so clearly merits mention on the HYP board.

[idpickering]

But not on this board. I rarely look at the company news board so was not aware of Dave's post until now. It is an HY share so clearly merits mention on the HYP board.

Agreed. I hold and admit to missing this report yesterday, as I mentioned over on Company News earlier on. Not sure if I will buy more of MNG though tbh. We’ll see?

Ian.

[daveh]

But not on this board. I rarely look at the company news board so was not aware of Dave's post until now. It is an HY share so clearly merits mention on the HYP board.

Agreed. I hold and admit to missing this report yesterday, as I mentioned over on Company News earlier on. Not sure if I will buy more of MNG though tbh. We’ll see?

Ian.

I hold, courtesy of The PRU and topped up to a fullish holding, now very close to median as they have made good gains. However, I'm not sure (from my fairly cursory perusal of the results) that they have performed as well as either Legal and General or Aviva (both of which I also hold).

[pyad]

I hold, courtesy of The PRU and topped up to a fullish holding, now very close to median as they have made good gains. However, I'm not sure (from my fairly cursory perusal of the results) that they have performed as well as either Legal and General or Aviva (both of which I also hold).

I wouldn't bet the farm on M&G but as part of a widely diversified HYP I think it's reasonably attractive as a rep from the fund management sector. However that whole sector can be prone to shocks as there is not much to stop customers switching to other managers if they see poor performance, creating a net outflow which would hit fee income. Also, a reduction in AUMA due to market falls, over which they have little or no influence, would likely have a similar effect. I'd say they are pretty moatless. For this reason my holding in MNG is relatively small compared to LGEN which also has a big fund management business.

Competitor abrdn, (sic), cut its payout substantially a couple years ago and it never recovered thus far, just to show how vulnerable fund managers can be.

[Dod101]

I hold, courtesy of The PRU and topped up to a fullish holding, now very close to median as they have made good gains. However, I'm not sure (from my fairly cursory perusal of the results) that they have performed as well as either Legal and General or Aviva (both of which I also hold).

I wouldn't bet the farm on M&G but as part of a widely diversified HYP I think it's reasonably attractive as a rep from the fund management sector. However that whole sector can be prone to shocks as there is not much to stop customers switching to other managers if they see poor performance, creating a net outflow which would hit fee income. Also, a reduction in AUMA due to market falls, over which they have little or no influence, would likely have a similar effect. I'd say they are pretty moatless. My holding in MNG is relatively small compared to LGEN which also has a big fund management business.

Competitor abrdn, (sic), cut its payout substantially a couple years ago and it never recovered thus far, just to show how vulnerable fund managers can be.

I do not know anything of M&G but it must be better than abrdn which is and has been a hopeless case for some years, at least since they merged with or took over Standard Life and probably before that. The best of the bunch is I think Schroders.

None of them can be compared to Legal & General which is a more or less 'accidental' or at least 'incidental' fund manager as an adjunct to their business as a life insurer.

Dod

[MrFoolish]

I wouldn't bet the farm on M&G but as part of a widely diversified HYP I think it's reasonably attractive as a rep from the fund management sector. However that whole sector can be prone to shocks as there is not much to stop customers switching to other managers if they see poor performance, creating a net outflow which would hit fee income. Also, a reduction in AUMA due to market falls, over which they have little or no influence, would likely have a similar effect. I'd say they are pretty moatless. For this reason my holding in MNG is relatively small compared to LGEN which also has a big fund management business.

Competitor abrdn, (sic), cut its payout substantially a couple years ago and it never recovered thus far, just to show how vulnerable fund managers can be.

You seem to be flip-flopping between saying it's "reasonably attractive" and saying it could be permanently stuffed by its competitors.

I'd probably stick with LGEN, which is better diversified, as it also has property investments for example.

[pyad]

You seem to be flip-flopping between saying it's "reasonably attractive" and saying it could be permanently stuffed by its competitors.

I'd probably stick with LGEN, which is better diversified, as it also has property investments for example.

Nothing like an out of context quote to try and score points.

What I actually said was ...I think it's reasonably attractive as a rep from the fund management sector.. The bit I've bolded makes all the difference. To make it clear, if a HYPer wants shares from the FM sector for diversification, then I think MNG is a decent candidate. There are others too which could be considered. I was just pointing out some possible sector risks, but I don't think these are so over-riding as to disqualify the whole sector in a well diversified HYP. No "flip-flop".

On your second point, HYP shares are not mutually exclusive. In fact it's positively desirable to have multiple shares from any sector, as long as they meet the criteria, to reduce company-specific risk. Your sticking with LGEN does not exclude the possibility of also holding MNG or other FMs or insurers.

[idpickering]

I hold, courtesy of The PRU and topped up to a fullish holding, now very close to median as they have made good gains. However, I'm not sure (from my fairly cursory perusal of the results) that they have performed as well as either Legal and General or Aviva (both of which I also hold).

I wouldn't bet the farm on M&G but as part of a widely diversified HYP I think it's reasonably attractive as a rep from the fund management sector. However that whole sector can be prone to shocks as there is not much to stop customers switching to other managers if they see poor performance, creating a net outflow which would hit fee income. Also, a reduction in AUMA due to market falls, over which they have little or no influence, would likely have a similar effect. I'd say they are pretty moatless. My holding in MNG is relatively small compared to LGEN which also has a big fund management business.

Competitor abrdn, (sic), cut its payout substantially a couple years ago and it never recovered thus far, just to show how vulnerable fund managers can be.

I do not know anything of M&G but it must be better than abrdn which is and has been a hopeless case for some years, at least since they merged with or took over Standard Life and probably before that. The best of the bunch is I think Schroders.

None of them can be compared to Legal & General which is a more or less 'accidental' or at least 'incidental' fund manager as an adjunct to their business as a life insurer.

Dod

I wouldn’t bet the farm on MNG either. I hold Schroders in the sector too and am happy to hedge my bets between them. As of now MNG weigh in as being 3% in capital value terms of my 28 share HYP. My holding in LGEN is over 4.4% of the HYP. I have no holding in abrdn, and have no plans on changing my stance on that tbh.

Ian.

[Dod101]

I wouldn't bet the farm on M&G but as part of a widely diversified HYP I think it's reasonably attractive as a rep from the fund management sector. However that whole sector can be prone to shocks as there is not much to stop customers switching to other managers if they see poor performance, creating a net outflow which would hit fee income. Also, a reduction in AUMA due to market falls, over which they have little or no influence, would likely have a similar effect. I'd say they are pretty moatless. For this reason my holding in MNG is relatively small compared to LGEN which also has a big fund management business.

Competitor abrdn, (sic), cut its payout substantially a couple years ago and it never recovered thus far, just to show how vulnerable fund managers can be.

You seem to be flip-flopping between saying it's "reasonably attractive" and saying it could be permanently stuffed by its competitors.

I'd probably stick with LGEN, which is better diversified, as it also has property investments for example.

L & G is not just 'better diversified' it is in an entirely different business.

Dod

[MrFoolish]

You seem to be flip-flopping between saying it's "reasonably attractive" and saying it could be permanently stuffed by its competitors.

I'd probably stick with LGEN, which is better diversified, as it also has property investments for example.

Nothing like an out of context quote to try and score points.

What I actually said was ...I think it's reasonably attractive as a rep from the fund management sector.. The bit I've bolded makes all the difference. To make it clear, if a HYPer wants shares from the FM sector for diversification, then I think MNG is a decent candidate. There are others too which could be considered. I was just pointing out some possible sector risks, but I don't think these are so over-riding as to disqualify the whole sector in a well diversified HYP. No "flip-flop".

On your second point, HYP shares are not mutually exclusive. In fact it's positively desirable to have multiple shares from any sector, as long as they meet the criteria, to reduce company-specific risk. Your sticking with LGEN does not exclude the possibility of also holding MNG or other FMs or insurers.

That's fine, and I find little to disagree with there.

But I'm a little surprised to read you say: In fact it's positively desirable to have multiple shares from any sector, as long as they meet the criteria, to reduce company-specific risk.

It has frequently come up on this board that HYPs, left to their own devices, can become very concentrated, with a few shares producing most of the income. You've always seemed to avoid commenting on this, so I've assumed you must be pretty relaxed about it. But now you mention it's desirable to have multiple share from each sector, so this seems to be recommending a big portfolio. Why not clear up your view on this once and for all?

[Arborbridge]

That's fine, and I find little to disagree with there.

But I'm a little surprised to read you say: In fact it's positively desirable to have multiple shares from any sector, as long as they meet the criteria, to reduce company-specific risk.

It has frequently come up on this board that HYPs, left to their own devices, can become very concentrated, with a few shares producing most of the income. You've always seemed to avoid commenting on this, so I've assumed you must be pretty relaxed about it. But now you mention it's desirable to have multiple share from each sector, so this seems to be recommending a big portfolio. Why not clear up your view on this once and for all?

You've drawn a conclusion from something Pyad hasn't said - a clever (but invalid) rhetotical device.

OTOH, I've never known Pyad to be against multiple shares in one sector, and there's a good chance he may have found it an acceptable idea - remembering discussions from years past. The only point I remembering him making on that score was - if you have multiple holdings - to make each one a suitable proportion of the whole. i.e. two shares in one sector would have roughly half the value each.

Maybe it's the heat, but I get a sense that you are tilting at Windmills (Don Quixote - very enjoyable ballet, BTW)

Arb.

[MrFoolish]

You've drawn a conclusion from something Pyad hasn't said - a clever (but invalid) rhetotical device.

OTOH, I've never known Pyad to be against multiple shares in one sector, and there's a good chance he may have found it an acceptable idea - remembering discussions from years past. The only point I remembering him making on that score was - if you have multiple holdings - to make each one a suitable proportion of the whole. i.e. two shares in one sector would have roughly half the value each.

Maybe it's the heat, but I get a sense that you are tilting at Windmills (Don Quixote - very enjoyable ballet, BTW)

Arb.

Well I asked him if he could be clear about his opinion on it. We all enjoy giving our opinions, don't we? Should he choose to respond then you won't have to answer on his behalf.

(I thought Don Quixote was a Nick Kershaw song.)

[Itsallaguess]

But I'm a little surprised to read [pyad] say: In fact it's positively desirable to have multiple shares from any sector, as long as they meet the criteria, to reduce company-specific risk.

It has frequently come up on this board that HYPs, left to their own devices, can become very concentrated, with a few shares producing most of the income.

[He's] always seemed to avoid commenting on this, so I've assumed [he] must be pretty relaxed about it.

But now [he] mentionsbit's desirable to have multiple shares from each sector, so this seems to be recommending a big portfolio. Why not clear up [his] view on this once and for all?

From a 2019 pyad post -

For a long time now, I have been defining diversification in an HYP by the number of sectors rather than by the number of individual shares in order to avoid the confusion sometimes created when people refer to the number of shares without explaining whether or not they are all in different industries.

That, I think, makes it much clearer so I'd refer now to a minimum of 15 sectors rather than 15 shares, in order to cover multi-holding sectors.

All the HYPs I've constructed for some years now have had more shares than sectors due to some of the latter having more than one holding.

https://www.lemonfool.co.uk/viewtopic.php?t=17414#p217921

Cheers,

Itsallaguess

[pyad]

L & G is not just 'better diversified' it is in an entirely different business.
Dod

I agree with this and regard FMs as one sector and insurers like LGEN as another. There may be some overlap but I'm with Dod in that they are sufficiently differentiated to be two distinct sectors.

[pyad]

From a 2019 pyad post -

For a long time now, I have been defining diversification in an HYP by the number of sectors rather than by the number of individual shares in order to avoid the confusion sometimes created when people refer to the number of shares without explaining whether or not they are all in different industries.

That, I think, makes it much clearer so I'd refer now to a minimum of 15 sectors rather than 15 shares, in order to cover multi-holding sectors.

All the HYPs I've constructed for some years now have had more shares than sectors due to some of the latter having more than one holding.

https://www.lemonfool.co.uk/viewtopic.php?t=17414#p217921

Cheers,

Itsallaguess

Yup, that's about it. Just to add, as Arb says above, that with multiple choices from a sector, they should in total be each about an equal proportion of your average sector cost for a new port, or current average sector value for an existing one to which you are adding, so as not to overweight it. Nothing new here, it was already old news in this 2019 quote as it says.

By the way, I'm not saying it is critical to have multiple choices, just that it reduces company-specific risk with the trade-off that the sector income will be the average income of those shares rather than that of the highest yielder. So there may be some yield sacrifice for the reduction of this risk, depending upon the degree of yield variation between the shares in the sector. Probably desirable for most HYPers I'd say.

I've been straw manned so frequently over the years that I'd make a good scarecrow.

[Arborbridge]

You've drawn a conclusion from something Pyad hasn't said - a clever (but invalid) rhetotical device.

OTOH, I've never known Pyad to be against multiple shares in one sector, and there's a good chance he may have found it an acceptable idea - remembering discussions from years past. The only point I remembering him making on that score was - if you have multiple holdings - to make each one a suitable proportion of the whole. i.e. two shares in one sector would have roughly half the value each.

Maybe it's the heat, but I get a sense that you are tilting at Windmills (Don Quixote - very enjoyable ballet, BTW)

Arb.

Well I asked him if he could be clear about his opinion on it. We all enjoy giving our opinions, don't we? Should he choose to respond then you won't have to answer on his behalf.

(I thought Don Quixote was a Nick Kershaw song.)

Itsallaguess and myself have covered the subject adequately, saving Pyad the bother (though he has responded). Glad to have been of use.

[MrFoolish]

Itsallaguess and myself have covered the subject adequately, saving Pyad the bother (though he has responded). Glad to have been of use.

I actually don't think the question has been properly answered. We seem to be swerving between "positively desirable to have multiple shares from any sector" to "yeah, more than one is ok" (I paraphrase). The word "multiple" could mean anything quite frankly.

The possibly more important question of the portfolio becoming unbalanced over time, income-wise, wasn't answered at all.