Overvalued Assets

Douglass isn’t alone in signaling concern with debt and equity-market valuations. A record 84 percent of professional investors in a Bank of America Corp. survey released this month said bonds were too expensive, while the most fund managers since 2000 said the same about global stocks. The MSCI World Index is up more than 150 percent from its 13-year low in March 2009, when the bull market began.

Magellan’s move to increase cash isn’t dissuading new investors. The firm had A$35.8 billion in funds under management at the end of March after receiving net inflows of A$336 million during the month. Shares of Magellan Financial, which is listed in Sydney, surged more than 2000 percent over the past five years.

If equities “continue to go up in price and we continue to hold the view we have of what the world looks like in three years, all probabilities are that we would hold more cash in that environment,” Douglass said.

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