The Fund fell 1.7% in January, outperforming the Small Industrials by 0.3% and underperforming the Small Ordinaries by 4.5%. For the 12 months to January, the Fund was up 3.8%, outperforming the Small Industrials by 0.6% and underperforming the Small Ordinaries by 18.9%.
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
Markets were mixed in January, with US bonds fading and equities rising mildly. The US market rose 1.4%, while European and Japanese markets were stronger. Software stocks were pressured in January (and into early February) amid concerns about AI’s potential threat to their long-term business models. Globally, markets skewed away from tech stocks and longer dated growth stocks towards cyclicals, as the sense of economic recovery strengthened and the expectation of further rate cuts faded.
Gold prices continued their remarkable rise, rallying a further 9% in January, despite a sharp correction at the end of the month, which also saw silver prices fall over 30% in one night (despite this, silver was still up over 10% for the month).
The Australian market rose 1.2% in January, with mining stocks up 10%. Small-cap stocks rallied by 2.7%, with industrials falling, and mining stocks strongly outperforming. The RBA’s rate increase has resulted in a rally in the AUD, and a sense that the Australian economy is showing signs of strain, given tight labour markets, which have seen inflation linger beyond initial expectations.
Our positive contributors in January included:
ALS Group (+12%) and Imdex (+10%) derive a high proportion of income from mineral exploration, which is enjoying a cyclical boost due to higher commodity prices. Breville (+9%), Mader Group (+8%), and Eagers Automotive (+9%) also contributed, in the absence of any stock specific news.
Our negative contributors in January included:
Catapult Sports (-16%) and Technology One (-10%) were caught up in the wild sentiment swing away from software stocks globally due to fears that AI is disrupting the industry. The market has taken a “shoot first, ask questions later” approach, which is likely to open up opportunities in the confusion. Zip Co (-19%) and Generation Development (-9%) have been volatile of late, with the global skew away from high growth sectors towards cyclicals no doubt impacting. Charter Hall (-6%) declined after property trusts were marked down following the RBA rate rise.