Portfolio Manager
Portfolio Manager
An International Fund targeting superior risk-adjusted returns through investing in high-quality and durable growing companies at reasonable prices.
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The Pengana Harding Loevner International Fund invests in high-quality, growing companies identified through fundamental research with a long-term, global perspective.
Pengana has appointed Harding Loevner to managed the Fund. Harding Loevner is a New Jersey-based global equity fund manager formed in 1989 with over US$86billion in Assets under Management.
Harding Loevner’ analysts search the world for companies that meet their high quality and durable growth criteria, conduct fundamental research, then value and rate their stocks to make them available to PMs for investment.
1. Harding Loevner was appointed fund manager as of 10 May 2021. June 2021 represents the first full month of Harding Loevner managing the Fund.
2. Class B Inception date 1 July 2015. Figures shown are calculated from the continuous performance of both the current and previous strategies. For performance see row labelled Fund (APIR PCL0026AU) in the table above which is the continuous performance of both the current and previous (shaded) strategies.
3. Harding Loevner Global Equity Strategy inception 1 Dec 1989
4. Prior to June 2021, the Harding Loevner Global Equity Strategy performance (labelled ‘Current Strategy (Partial Simulation)’ and shown in the shaded area) includes the strategy performance simulated by Pengana from the monthly gross returns of the Harding Loevner Global Equity strategy. This simulation was done by: 1) the conversion of US-denominated gross returns to AUD, 2) applying the fee structure of Class B. From June 2021 the strategy performance is the performance of the Pengana Harding Loevner International Fund Class B.
5. MSCI All Country World Total Return Index in AUD.
6. Performance for periods greater than 12 months are annualised. 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.
7. The Harding Loevner Global Equity Strategy performance (shown in the shaded area in the chart, and in the performance table as row labeled ‘Harding Loevner Global Equity Strategy) has been simulated by Pengana from the monthly gross returns of the Harding Loevner Global Equity strategy. This simulation was done by: 1) the conversion of US-denominated gross returns to AUD, 2) applying the fee structure of the stated class. Strategy Inception 30 November 1989.
8. Annualised standard deviation since inception.
9. Relative to MSCI All Country World Total Return Index in AUD
* For further information regarding fees please see the PDS available on our website.
COMMENTARY
Market Commentary
Global equities advanced in August, with the benchmark posting a modest gain, though performance masked notable divergences across regions and styles. Materials led sector returns, supported by higher commodity prices, while Information Technology lagged as concerns mounted over the rising costs of AI infrastructure. Value stocks continued to outperform, with the cheapest quintile of the market beating the most expensive by more than 350 basis points, extending a rotation that has challenged growth-oriented companies.
Regional performance was mixed. Japan stood out as one of the strongest markets after securing a trade agreement with the United States, which lifted confidence in its growth outlook. Europe also delivered gains, underpinned by improving sentiment and both manufacturing and services PMIs returning to expansionary territory. In contrast, Emerging Markets underperformed. Indian equities fell sharply following the imposition of US tariffs, while South Korea and Taiwan declined, given their heavy exposure to large AI technology companies. China remained a source of concern, with retail sales and trade data undershooting expectations and pointing to softer domestic demand.
Macro conditions were generally constructive. Inflation continued to moderate across most regions, with the US Core PCE Index steady at 2.9% year-on-year. The Federal Reserve struck a dovish tone at its Jackson Hole summit, raising expectations that monetary easing could begin sooner than previously thought. In the US, consumer demand remained resilient, with retail sales moderating but still healthy in real terms. These developments helped support risk appetite, even as policy uncertainty and style rotations influenced market leadership.
Portfolio Commentary
The Fund returned -2.7% in August, underperforming the benchmark as style headwinds and stock-specific disappointments weighed on results. Companies that failed to deliver on growth expectations, or signalled uncertainty over future prospects, were particularly hard hit.
The Trade Desk, the leading independent demand-side platform for digital advertising, was the most significant detractor. Shares fell sharply after management issued cautious revenue guidance and highlighted rising competition from Amazon’s DSP, a programmatic advertising platform integrated with Amazon’s vast retail and media ecosystem. While the update unsettled investors, the team views the outlook as conservative, given current volatility and remains confident in the company’s long-term growth potential as the only scaled, objective alternative to the ad giants.
A new position was added in Delta Electronics, a Taiwanese power component maker with more than 50% market share in advanced power supplies for telecom equipment, data centres, servers, and consumer electronics. The company’s diversified supply chain, spanning Thailand, India, and Slovakia, positions it well to meet global demand relative to its Chinese rivals and at a lower cost than its international peers. Beyond its core markets, Delta is selectively expanding into electric vehicles and industrial automation, offering additional growth opportunities.
Other detractors included Atkore, a US-based manufacturer of electrical conduit, which fell after announcing the year-end retirement of its CEO and continued weakness in PVC pipe markets. In Health Care, Chugai Pharmaceutical declined after phase 3 data for its GLP-1 weight-loss drug with Eli Lilly fell short of investor expectations, while Vertex Pharmaceuticals dropped following disappointing phase 2 trial results for its non-opioid pain treatment VX-993.
There were some positives. Sony delivered solid results, exceeding consensus expectations on the strength of its gaming and image sensors businesses. The team continues to view Sony as well positioned to benefit from global demand for entertainment content and advanced semiconductor components.
While August was a challenging month, with style headwinds impacting a number of holdings, the portfolio remains positioned in high-quality companies with durable advantages and strong long-term growth drivers. The team continues to apply a disciplined, bottom-up approach, adding selectively to opportunities where fundamentals support earnings visibility, while remaining mindful of near-term market rotations.