The MSCI World Minimum Volatility Index, filled with stocks seen as safer bets in times of turmoil, was trading at a 31 percent premium to MSCI’s regular world share gauge by price to earnings as of Jan. 29.
U.S. Shares
Magellan’s global fund counted Apple Inc., Microsoft Corp. and Wells Fargo & Co. among its largest holdings at the end of January. More than half its investments were in U.S. equities, and it had 15.6 percent of assets in cash. The company is seeing record inflows from individual investors, according to Douglass.
Douglass rose to prominence in Australia as a dealmaker, climbing the ranks to become co-head of global banking for Australia and New Zealand at Deutsche Bank AG at 35. In 2006, he co-founded Magellan Financial Group with partner Chris Mackay, securing the backing of billionaire James Packer.
Douglass was selling shares and increasing cash well before stocks turned downward. The global fund more than tripled its cash holdings from July 2014 to August that year on concern that valuations were too stretched.
Early, Late
“It’s better being six months too early than six minutes too late on these things, he said. “Maybe I was 12 months too early rather than 12 minutes too late.”
Still, when it comes to buying, he’s prepared to wait.
“China will steady over the next 12 months,” he said. “If that happens, as U.S. rates start to go up, we’ll get some interesting repricing that will enable us to deploy the cash.”