The $1.6 billion fund manager Chris Mackay sold almost half his holdings in the first half of year, saying there was way too much optimism the economic fallout from coronavirus.

That meant MFF Capital sat on around $733 million in cash at the end of last month.
Mr Mackay defended the 46 per cent cash weighting by using his latest market update to reference academic research that suggested the market was too optimistic over the likelihood of a COVID-19 vaccine.
“Business owners, political leaders and the general public appear to be more optimistic, around the world, as are recipients of fiscal payments travelling hundreds of miles to queue for hours for gaming venues reopening.”
The fund manager further justified the sale by arguing the virus will have long-term economic consequences.
“Heavily populated cities, globalisation and widespread global travel are crucial for ongoing economic growth and economic sufficiency for billions of people, but they are the fuel for future airborne viruses spreading.
“Longer term, even if this pandemic is promptly brought under control, conditions for ready transmission remain.”
The fund manager, who declined to elaborate further on Tuesday, went on to attribute the shock rise in global equity markets over May, which included a 9.1 per cent return for the Nasdaq, partly to the rising influence of exchange traded funds (ETFs).
“ETF trading is almost never associated with fundamental analysis of the underlying values compared with market prices of the individual components.”
Mr Mackay also argued the unprecedented fiscal and monetary policy response to the pandemic may have long-term consequences that the short-term focused market has not priced in.
“Cyclicality may be disguised and underestimated during the heaviest phases of fiscal and monetary stimulus,” he told investors.
“Historically there have been eventual limits, for example to massive bond issuance, although relatively unconstrained issuance and central bank buying may go on for extended periods.
“The implications for US markets are unknown if, for example, 10-year bond rates move to say 2 per cent from 0.6 per cent. The last 30 years in Japan do not support a favourable thesis for sustained economic earnings and market growth, although the economic and market differences between leading US companies and Japan are meaningful.”
Under the fund’s investment limits, no single investment in a company should exceed 10 per cent of the NAV, or 20 per cent given permission from the board. MFF Capital has not publicly disclosed any hard limits on cash holdings.
Mr Mackay told investors at the end of financial 2019 that higher market prices, and sustained low-interest rates, meant that his expectations for future medium-term returns were lower.
His biggest current equity positions are Visa (18.2 per cent), MasterCard (16.2 per cent), and Home Depot (9.3 per cent).