Magellan makes first foray into China
Magellan’s Hamish Douglass has made his first direct investment into China with a 5.5% holding in Alibaba, which he described as ‘close to the best business in the world’, saying he is more worried about the regulatory environment in the US than in China.
Speaking at the Morningstar Individual Investor conference in Sydney, the manager, who runs the $1.5 billion Magellan Global Equities fund, said it had taken him three years to ‘get comfortable’ with the prospect of investing in the country.
Alibaba, though, was particularly attractive to him as it had four diverse businesses covering e-commerce, online payments, cloud computing and entertainment.
“We historically haven’t had direct China exposure so this is a new position for the portfolio. We have invested $3 billion in Alibaba which is a material stake.
“Alibaba is close to being the best business in the world and it has four different underlying businesses which I think makes it unique. Some 700 million consumers are using its e-commerce platform which is twice the size of Amazon.”
Asked how he measures his investment with the regulatory and political environment in China, Douglass said political risk was a risk with investing all over the world.
He specified highlighted the US healthcare as he had a significant investment in that space and the threat posed by US presidential candidate Elizabeth Warren who is campaigning on the promise of Medicare for All.
“There are risks to investing in China such as the black box nature and the Communist party but we face political risk with many global stocks, not just in China.
“I think healthcare risk in the US is our number one regulatory issue we are facing, more so than in China, as we hold [US hospital firm] HCA Healthcare.”
The Magellan Global fund has returned 15.7% over one year to 30 September, 2019 versus returns of 7% by the ACS Equity-Global sector.
Performance of Magellan Global fund versus ACS Equity-Global sector over one year to 30 September, 2019.
AUTHOR
Laura Dew
Recommended for you
The alternative investment manager has signalled its intentions to repackage an existing fund into a second private equity vehicle, targeting both listed and unlisted opportunities.
The acquisition of Mason Stevens by Adamantem Capital has reached completion, as the wealth platform looks to increase investment into its services for Australian wealth practices.
Platinum Asset Management and VanEck have both announced name changes to multiple of their ETFs to clarify their complexity.
Active ETFs are gaining traction in Asia-Pacific as wealth managers seek to blend the low-cost fees of passive with active management.
