Should half of your share portfolio actually be cash right now? That's what listed investment company (LIC) MFF Capital Investments Ltd (ASX: MFF) has done.
I really respect fund manager Chris Mackay, I think he's one of the best investors in Australia. He has guided MFF Capital to be one of the best LICs over the past decade with great picks like Visa and Mastercard.
MFF Capital timed the payment of a special dividend well, coming just before the coronavirus market crash.
I think it was very interesting to see that in MFF Capital's May 2020 update it said that net cash as a percentage of assets was now 46.4%, now almost half of the whole portfolio.
Mr Mackay is keeping in mind how factors like heavily populated cities, globalisation and widespread global travel are crucial for ongoing economic growth and the economic sufficiency of billions of people. But these factors are also partially how the coronavirus spread so easily.
Other geopolitical issues are also concerning to Mr Mackay with problems in Hong Kong and the riots in the US.
Should you sell half your portfolio?
I don't think you need to be that drastic with your portfolio. I'm certainly not going to sell half my portfolio. But I am bit concerned for the US over the next six months. The riots, ongoing pandemic and upcoming US election could be a challenging time with the US president's unique style.
The share market recovery is somewhat justified with how much central bank support there is. And the fact that the pandemic isn't as bad as it could have gotten despite there being more than 100,000 deaths in the US alone.
Not every share has a great future from the changes that the coronavirus will cause to the economy. But there are still opportunities out there that look good, particularly with how low interest rates are.
Having said that, I'd like to buy more MFF Capital shares. Mr Mackay is a great operator and now it's well funded for downside protection and can buy plenty of shares if the share market is sold off again.