Magellan chair and chief investment officer Hamish Douglass believes COVID-19 could lead to near total economic shutdown, but says his global equities portfolio is well positioned to withstand the current volatile environment.
To reduce risk, Douglass has increased the portfolio's cash holdings from six to 15%, all of which will be held in US dollars.
In a portfolio update, Douglass warned of the economic impacts of the pandemic.
"The COVID-19 virus is a fast-moving and fluid situation. The most likely outcome of the efforts to contain this health emergency is a near total shutdown of the world's economy over the next two to six months," he said.
"This is likely to lead to a near total collapse in demand for many (but not all) businesses over this period.
"Only governments can prevent these businesses from failing. The potential financial and social consequences are very concerning."
It comes just two weeks after Magellan's annual roadshow, during which Douglass said there was still investment opportunities abound and implored investors to not get "caught up" in COVID-19 panic.
"It's very important we don't miss the opportunity ahead of us," he said at the roadshow.
"We are in a complex world at the moment, steering through this very low interest rate world is difficult, and at the very moment we're facing the threat of coronavirus.
"It's very easy to get caught up in the moment, and then miss what's really in front of us here. It's more important than ever that we look forward and not backwards in this world."
During the roadshow, Douglass said cloud computing and China would continue to be investment opportunities in the future.
"We have to understand the power of these technology platforms... how do we invest at scale where the cloud computing opportunities and software opportunities are going to be?" He said.
"We have to smartly think about how are we can participate in that income growth in China in a world that is pretty complex and has a lot of tension in it as well.
"We also have to think about the disruption that the world is facing at the moment, both geopolitically, but also the advent of technology and business change is destroying many business models in the world; just doing what we did a decade ago is not going to work in the future."
He believes the global equity portfolio is well positioned to weather the spreading pandemic.
"Our portfolio holds few or no investments across industries that are the most vulnerable to this crisis," Douglass said.
"The portfolio does not hold any banks, energy companies, airlines, travel-related companies or property trusts.
"The portfolio has no direct exposure to emerging markets, other than China. Our indirect exposure to other emerging countries is modest."
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