Magellan Financial Group Ltd (ASX: MFG) co-founder Hamish Douglass has a reputation as being one of the ASX’s top fund managers. And for good reason too. Magellan has a stellar record of market outperformance that would turn other fund managers green with envy. The company’s flagship Global Fund has returned an average of 15.86% per annum over the past 10 years – outperforming its benchmark by an average of 3.67% per annum.
Needless to say, if Douglass has something to say, most investors are happy to listen.
So on that note, today we’ll be looking at the updates Magellan has just provided for its funds for the month of July, which include the shares that Magellan was holdings in its portfolios as of 31 July.
Magellan’s top stock picks for August
For its Global Fund – which is mirrored on the ASX in the form of the Magellan Global Trust (ASX: MGG) – between 20 and 40 global companies are selected. In its latest update, Magellan informed us that its top 10 shares (in alphabetical order) are as follows:
- Alibaba Group
- Alphabet Inc.
- Facebook Inc.
- Microsoft Corporation
- Novartis AG
- Reckitt Benckiser Group
- SAP SE
- Starbucks Corporation
- Tencent Holdings
- Xcel Energy
Magellan also runs a ‘high conviction’ strategy, where its 8–12 best investment ideas are selected in a high-octane portfolio. So turning to the Magellan High Conviction Trust (ASX: MHH), here are this fund’s top holdings (again in alphabetical order):
- Alibaba Group
- Alphabet Inc.
- Facebook Inc.
- Microsoft Corporation
- Tencent Holdings
Takeaways from Magellan’s portfolios
Across both portfolios/strategies, we can see a clear preference for both tech and e-commerce companies. Alphabet and Facebook are both giants of the online advertising space, whereas Microsoft, Alibaba and Tencent are more well-rounded e-commerce companies with a variety of popular services. Interestingly, Microsoft and Tencent are also heavyweights in the console and mobile gaming space.
Some of the other companies that Magellan owns in the Global Fund and Trust are clearly performing a defensive role. Xcel Energy is a US-based utility provider, whilst Reckitt Benckiser is a consumer staples giant and owner of several brands you are probably familiar with (including Mortein, Dettol, Harpic and Nurofen).
What about cash?
Magellan also tells us that for its global portfolio, its funds are currently sitting in 15%. The high conviction strategy is a little more bearish, with a 22% cash position.
This to me indicates that Magellan is having a bet both ways. If markets continue to rise, the funds are ready to capture upside. But if there is a second market crash, Magellan is also relatively well-insulated and will have some dry powder to deploy.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, Starbucks and Magellan High Conviction Trust. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Facebook. The Motley Fool Australia has recommended Alphabet (A shares) and Facebook. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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