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 declined in December, as a result of a weak US market and a pronounced shift in market leadership. Performance was shaped by a rotation towards more interest rate–sensitive sectors, supported by improving economic signals and a more supportive policy environment. Financials and Materials were the strongest-performing sectors, benefiting as the European Central Bank raised its economic growth forecasts and reported low inflation, while the US Federal Reserve and the Bank of England cut interest rates during the month.
By contrast, defensive sectors lagged. Utilities and Real Estate were the weakest-performing sectors, as investor preference shifted away from defensives amid improving risk appetite. This environment continued to favour cheaper, more cyclical areas of the market, reinforcing the style dynamics that characterised market leadership during the period.
At a regional level, Europe was the strongest-performing market, rising over 3.5% as expectations for economic stabilisation improved. The United States was the weakest region, dragged down by weakness in software stocks. Shares of Oracle declined after the company reported disappointing cloud sales and highlighted a sharp increase in AI-related spending, which weighed on sentiment across the broader technology sector.
Portfolio Commentary
The Fund declined 1.35% in December, proving less resilient than the benchmark, in a challenging style environment that favoured cheaper, lower-quality companies. Currency movements also detracted from absolute returns during the month, with Australian dollar strength weighing on performance. From a sector perspective, the portfolio benefited from its positioning in Health Care and Information Technology, although these gains were more than offset by style headwinds and weakness in Communication Services.
In Health Care, performance was supported by continued strength in European and US holdings. Shares of Roche, the Swiss pharmaceutical company, continued to rise following interim results showing that its breast cancer drug kept early-stage patients cancer-free for longer than the current standard treatment, reinforcing confidence in the company’s oncology pipeline. In the US, Vertex Pharmaceuticals, a biotechnology company, benefited from ongoing strong adoption of its cystic fibrosis therapies, contributing positively to returns.
Within Information Technology, the portfolio also generated positive relative contributions. An overweight position in TSMC supported results, while the portfolio’s lack of exposure to Apple, whose shares declined during the month, further aided relative performance.
During the month, the team exited its position in Synopsys, a US chip-design software developer. The decision reflected concerns around the company’s acquisition of Ansys, an engineering simulation software developer, with management guidance for 2026 assuming double-digit growth. Given the already rich valuation of Synopsys’ shares, the team viewed these assumptions as leaving limited margin for error.
The portfolio detracted in Communication Services. Shares of Netflix declined as investors became concerned about the potential for a bidding war and extended regulatory scrutiny related to its planned acquisition of Warner Bros Discovery.
Style effects were a significant influence on relative performance during the month. The cheapest companies in the index outperformed the most expensive by over 500 basis points, while lower-quality and slower-growing companies also outperformed their higher-quality counterparts.
Despite this backdrop, the portfolio remains focused on high-quality businesses with durable competitive advantages, strong balance sheets and sustainable long-term growth drivers, consistent with the team’s disciplined, bottom-up investment approach.