The US election results have made one ASX fund manager very happy indeed. In fact, Magellan’s Hamish Douglass thinks this is ‘nirvana’.
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Most of us watching the US election result no doubt have a mixed range of emotions. Regardless of political affiliation, most commentators have been lamenting the lack of a more decisive outcome either way.
But one ASX fundie is happy, (one could say almost ecstatic) over what the election has produced. Hamish Douglass is among the most successful fund managers on the ASX. He heads up Magellan Financial Group Ltd (ASX: MFG), one of Australia’s largest asset managers. Magellan has several popular investment vehicles that have been delivering impressive results over the past decade. The flagship (and unlisted) Magellan Global Fund, for instance, has returned an average of 15.91% per annum over the past 10 years, and 12% per annum since its inception in 2007.
In short, this is someone who many investors would pay attention to.
So what does Mr Douglass have to say on the US election result? Well, according to reporting in the Australian Financial Review (AFR), he is happy with what he sees as the ‘checks and balances’ that the election has delivered.
“Even though we don’t know precisely who the president’s going to be, the outcome is the nirvana,” Mr Douglass was quoted as stating. “Almost the perfect outcome from an investment perspective has been the outcome of this election.”
Does the US election equal nirvana for investors?
Why does Mr Douglass draw this conclusion? Well, it’s the way the halls of power in the US are shaping up. See, the elections we just witnessed weren’t just for the presidency. The American Houses of Congress were also up for re-election on Wednesday (our time). And from the results, it looks as though the Democratic Party has retained control of the US House of Representatives, whilst the Republican Party has retained control of the Senate.
This, to Mr Douglass, translates into divided government and gridlock. And that, he believes, is very good news for investors:
If the Republicans keep the Senate, which I think they will, there will be no tax rises, there will be no massive regulatory reform, there will be no big left agenda. So the check and balance is going to be in…
And if Biden gets in, I suspect we’re going to have a more moderate discussion globally. We’re going to have a more normal discussion about foreign policy and global institutions and markets will like to hear that.
As for other risks, Mr Douglass doesn’t see inflation as a pressing concern for investors, stating that he believes “we won’t have any true pressures on inflation in the next 5 years”.
However, he does note that we’re also in a “massive experiment” when it comes to qantatative easing and other unprecedented and unconventional tools that the US Federal Reserve and other central banks around the world (including own Reserve Bank of Australia) are employing as counter-measures to the massive global recession the coronavirus pandemic has initiated.
As for coronavirus? Mr Douglass finishes with this note:
The outcomes of these vaccine trials are really going to tell us the way forward. I think we’re quickly going to move past US politics as being the major driver here and now back to the pandemic as the big issue for global markets.
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