The Fund rose 4.6% in July, underperforming the Small Industrials by -0.6% and outperforming the Small Ordinaries by 1.8%. For the 12 months to July, the Fund was up 19.5%, outperforming the Small Industrials by 10.1% and outperforming the Small Ordinaries by 7.9%.
Senior Fund Manager
Senior Fund Manager
The Pengana Emerging Companies Fund combines the skills of highly experienced small company investors (collectively over 45 years’ experience) with a limited fund size and an objective of providing above market returns over the medium term. Our benchmark is the S&P/ASX Small Ordinaries Accumulation Index. The fund managers Steve Black and Ed Prendergast are part owners of the business and investors in the Fund, providing a strong incentive to perform. The Fund has strong research ratings from all major research houses and over the period since its inception has delivered returns well above benchmark.
1. Net performance figures are shown after all fees and expenses, and assume reinvestment of distributions. No allowance has been made for buy/sell spreads. Please refer to the PDS for information regarding risks. Past performance is not a reliable indicator of future performance, the value of investments can go up and down.
2. Inception 1 November 2004.
* For further information regarding fees please see the PDS available on our website.
** The Fund does not invest in resource stocks.
COMMENTARY
Global markets drifted up in July with the US index rising 2.2%, and the NASDAQ 3.7%. Notwithstanding ongoing uncertainty around the US tariff policy, the market has now rallied 31% from the April lows, which is a remarkable recovery, and suggests investors believe any shorter term impact will be short and shallow. Bond yields rose slightly in July as expectations of lower interest rates were pushed out. The oil price rallied 7% following ongoing military tension in the Middle East.
The Australian market increased by 2.4% in July, with mining stocks outperforming following strong indications from China around economic stimulus packages, which assisted iron ore prices. Smallcaps saw the reverse, with industrials up 5.3%, and mining stocks down 3% given the higher concentration of gold stocks in the smallcap index, which faded over the month.
Our positive contributors in July included:
HUB (+20%) and Netwealth (+12%) continue to rally after being irrationally sold down in early April (HUB is now 118% higher than the April lows, and Netwealth is 88% higher, vindicating our decision to increase our exposure during the volatility). Generation Development (+10%) posted June quarter flow data showing improved momentum in Lonsec and Generation Life, offsetting slightly slower flows in the recently acquired Evidentia operations. Catapult (+13%) made fresh highs as the market appreciates the global growth opportunity. Breville (+11%) continues to recover from its decline in April, as tariff threats are wound back slightly, and investors gain comfort that the company can manage the challenge through dynamic supply chain management (the stock is now up 35% from the April lows).
Our negative contributors in July included:
Audinate (-18%), a small investment for our Fund, was weak in the month with no obvious catalyst. Gentrack (-15%) experienced a decline due to the loss of a small contract and delays in tender outcomes in the Northern hemisphere. Mainfreight (-11%) revealed a challenging first quarter due to global trade disruption and tougher margins in the NZ market. SGH Group (-5%) and Channel Infrastructure (-5%) drifted in the absence of any stock-specific news.