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Pengana International Equities Limited (ASX: PIA)

The largest International Ethical LIC on the ASX. Targeting fully franked dividends, paid quarterly.

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November 2020 - Monthly REPORT

The reflation trade

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NTA POST-TAX

NTA PRE-TAX

INVESTMENT PERFORMANCE1

DIVIDEND YIELD2

CONSECUTIVE DIVIDENDS PAID

1. Investment performance since new mandate adopted 1 July 2017.
2. Dividend yield is based on current displayed share price and dividends declared over the previous 12 months
3. Grossed up yield is based on current displayed share price, dividends declared over the previous 12 months and the tax rate and franking percentage applicable for the most recently declared dividend

SUMMARY

In Nov-20 the Portfolio delivered 6.2%, which was a strong outcome while still trailing the Market which delivered 7.5%. The stocks generating the largest positive returns were Mowi, Cigna, and Biotelemetry.

PORTFOLIO

Top Holdings (alphabetically)

Bharti Infratel India Communication Services Charter Communications Inc United States Communication Services Cigna Corp United States Health Care Houlihan Lokey Inc United States Financials Lumentum United States Information Technology Pinterest Inc United States Communication Services Rakuten Inc Japan Consumer Discretionary SIG Combibloc Group AG Switzerland Materials Tencent Holdings China Communication Services UnitedHealth Group Inc United States Health Care
See Portfolio Breakdown

Sector Breakdown

Capitalisation Breakdown

Region Breakdown

Segment

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 30 Nov 20201
1 Month1 Year3 Years P.A.5 Years P.A.10 Years P.A.SINCE MANDATED
Fund 6.2%15.4%12.2%8.7%10.5%12.6%
Benchmark 7.5%5.1%10.6%10.5%13.1%12.4%
1 Month1 Year3 Years P.A.5 Years P.A.10 Years P.A.SINCE MANDATED
Fund
6.2%
15.4%
12.2%
8.7%
10.5%
12.6%
Benchmark
7.5%
5.1%
10.6%
10.5%
13.1%
12.4%

COMMENTARY

The month’s trading was characterized as the reflation trade with the impetus being the strong results from various Covid vaccine trials and the belief that this will be the catalyst for economic growth in 2021. This resulted in a sharp and meaningful swing away from growth and to value stocks, with the former being a play on disruption-led growth and the latter on economic growth.

In Nov-20 the Portfolio delivered 6.2%, which was a strong outcome while still trailing the Market which delivered 7.5%. The stocks generating the largest positive returns were Mowi, Cigna, and Biotelemetry.

We do not have large exposure to the growth-at-any price stocks meaning our weaker stocks did not come from that part of the market. Rather, the largest detractors were Alibaba and Tencent, with their performance explained by mushrooming Chinese regulation of dominant tech platforms.

The Portfolio is meaningfully differentiated to the Benchmark with 26% of the Portfolio invested in Europe ex-UK vs the Benchmark’s 15% and 45% invested in North America vs the Benchmark’s 69%. Further, the Portfolio has fully exited the FAANG’s and has 8% invested in the IT sector vs the Benchmark’s 21%.

Finally, the portfolio is on a c5% FCF yield, 8% revenue CAGR and the companies in the fund have virtually no debt, all of which compare favourably to the broader market.

All portfolio holdings were compliant with the principles of the UN Global Compact and the portfolio had a “low ESG risk” rating, based on the aggregate weighted score of the portfolio’s holdings at month-end (source: Sustainalytics).

PROFILE

STATISTICAL DATA (Since Mandated)

PORTFOLIO SUMMARY
VOLATILITY3
8.5%
NUMBER OF STOCKS
34
BETA4
0.67

FEATURES

  • ASX CODE PIA
  • FEES Management Fee: 1.23% p.a.
    Performance Fee: 15.38% of any return greater than the Index***
  • INCEPTION DATE 19 March 2004
  • MANDATED 1 July 2017
  • BenchmarkMSCI World Total Return Index, Net Dividend Reinvested, in A$ ("Index")
  • NTA Post Tax ** A$ 1.326
    30/11/2020
  • NTA Pre Tax ** A$ 1.378
    30/11/2020
  • Price Close ** A$ 1.300
  • Shares On Issue ** 254.49m
  • Premium/Discount to pre-tax NTA ** -5.6%
  • DRP Yes

Portfolio Managers

Peter Baughan

Portfolio Manager

Jingyi Li

Portfolio Manager

Rick Schmidt

Portfolio Manager

Description

Pengana International Equities Limited (trading on the ASX as PIA) is the largest international ethical Listed Investment Company (“LIC”) on the ASX. PIA’s objective is to provide shareholders with capital growth as well as regular, reliable, and fully franked dividends.

The strategy aims to generate superior risk-adjusted returns, through investing in an actively managed portfolio of global companies that meet the investment team’s high-quality and durable growth criteria at reasonable prices. A robust ethical framework provides an added layer of risk mitigation.

These companies are identified through the conduct of fundamental research, with a long-term, global perspective, and must exhibit the following four key investment criteria: competitive advantages, quality management, financial strength, and sustainable growth potential.

EXPLORE OUR FUNDS

Harding Loevner International Fund
Harding Loevner International Fund
Axiom International Fund
Axiom International Fund
Axiom International Fund (Hedged)
Axiom International Fund (Hedged)
Australian Equities Fund
Australian Equities Fund
High Conviction Property Securities Fund
High Conviction Property Securities Fund
Global Small Companies Fund
Global Small Companies Fund
WHEB Sustainable Impact Fund
WHEB Sustainable Impact Fund
Emerging Companies Fund
Emerging Companies Fund
High Conviction Equities Fund
High Conviction Equities Fund
Pengana International Equities Limited (ASX: PIA)
Pengana International Equities Limited (ASX: PIA)
Private Equity Trust (ASX: PE1)
Private Equity Trust (ASX: PE1)
Alpha Israel Fund
Alpha Israel Fund
Pengana Diversified Private Credit Fund
Pengana Diversified Private Credit Fund
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1. As at the last day of last month prior to publishing of this report. Performance figures refer to the movement in net assets per share, reversing out the impact of option exercises and payments of dividends, before tax paid or accrued on realised and unrealised gains. 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 date of PIA: 19 March 2004, new investment team with new mandate adopted: 1 July 2017. Pengana International Equities Limited has been managed under the new investment mandate by the Pengana investment team since 1 July 2017. The performance since mandated in the table above refers to the movement in net assets per share since the new mandate adopted on 1 July 2017.

3. Annualised Standard Deviation since mandated
4. Relative to MSCI World Total Return Index, Net Dividends Reinvested
**As at the last day of last month prior to publishing of this report. The figures are unaudited.
*** Index/MSCI World refers to the MSCI World Total Return Index, Net Dividends Reinvested, in A$.