Raising cash levels as global risks remain

We continue to believe that there is an elevated probability that the massive compression of risk premia observed in recent years will unwind over the next 12 months or so as investors focus on a normalisation of US interest rates. As a consequence, we remain focused on a prudent portfolio construction likely to exhibit substantially less downside risk than the market. Cash levels in the fund rose to 13.9% at the end of the March quarter up from 11.3%. The US economy continues to strengthen as labour market conditions improved and the housing market recovery persists. However, recent data disappointed… This appears to be the result of a cautious consumer more inclined to save rather than structural weakness in the US economy or an impending turn in the US business cycle. China‘s economy experienced its slowest growth quarter in almost a decade. Retail sales and industrial production were weak, however, the deteriorating property market and increasing debt levels remain major concerns to growth prospects. Full report: (VIEW LINK)

Magellan was formed in 2006 by Hamish Douglass and Chris Mackay, two of Australia’s leading investment professionals. The company specialises in global equity and listed infrastructure assets.

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