CLOSE
BACK

OUR FUNDS

CLOSE

Emerging Companies Fund

An Australian small caps fund with a 18+ year track record

March 2022 - Monthly REPORT

March report

SUMMARY

The Fund rose 6.7% in March, outperforming the Small Industrials by 3.8% and outperforming the Small Ordinaries by 1.5%. For the 12 months to March, the Fund was up 17.7%, outperforming the Small Industrials Index by 17.7% and outperforming the Small Ordinaries Index by 8.0%.

Below is a recording of our recent webinar in which Senior Portfolio Manager Ed Prendergast provides performance, portfolio, and stock-specific updates for the Fund. Financial planners may also complete a short questionnaire available HERE for CPD points.

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 31 Mar 20221
1 MTH 1 YEAR 3 YEARS P.A. 5 YEARS P.A. 10 YEARS P.A. SINCE INCEPTION P.A.
Emerging Companies Fund 6.7% 17.7% 14.5% 12.0% 13.4% 13.3%
S&P/ASX Small Ordinaries Index 5.3% 9.7% 9.6% 9.9% 6.0% 5.6%
Outperformance 1.5% 8.0% 4.9% 2.1% 7.4% 7.7%
ASA Small Cap Industrials Index** 3.0% 0.0% 6.5% 7.7% 8.5% 5.9%
Outperformance 3.8% 17.7% 8.0% 4.3% 4.9% 7.4%

Swipe horizontally to see all columns

COMMENTARY

Markets bounced in March after two poor months driven by strength in commodity markets and encouraging earnings reports from the Q4 reporting season in the US. This strength was despite the obvious dislocation from the Russia/Ukraine conflict, and further evidence of higher inflation and interest rate rises. Neither situation (Russia or inflation) is settled so will remain a source of focus and volatility for some time.

The Australian sharemarket rose by 7.3%, which was well ahead of other global markets (US up 3.5%). This was due to a 10% rise in mining and bank stocks. Smallcap stocks lagged (rising 5.3%) with resources companies again outperforming.

Our key positive movers in March were:
Uniti Group (+44%) received two takeover offers. The stock had curiously fallen heavily in February due to a minor disruption to earnings growth, which enabled us to increase our position at highly favourable prices. The stock is our largest position, hence a key driver of shorter-term performance. Hansen Technologies (+17%) and Technology One (+16%) both bounced after being oversold in Jan/Feb – caught up with the global rout in higher risk tech stocks during the prior volatility. Johns Lyng Group (+14%) rallied as the disastrous floods in NSW created opportunities for its catastrophe response teams. Australian Clinical Labs (13%) was another stock that bounced following a poor price trend in Jan/Feb. Overall the March quarter was especially volatile in our sector which created wider swings in prices based on shorter-term emotions rather than genuine changes in the outlook for specific companies.

Our key negative movers in March were:
City Chic (-13%) continued to slide as investors questioned the recent build-up in inventories. We have a small position in the stock, and believe the inventory build is reasonable given the damaged supply chains, however, volatile markets often shoot first, and ask questions later. PSC Insurance (-8%) retraced following a capital raising to fund future acquisition opportunities – a wise long-term strategy that often creates short-term indigestion. Capitol Health (-5%) drifted following a solid result in February, with no discernible catalyst other than selling pressure in a relatively illiquid stock. IPH Group (-4%) relies heavily on billing in USD hence fell back as the A$ rallied 3% during March.

Performance Chart

NET PERFORMANCE SINCE INCEPTION2

PORTFOLIO

Top Holdings (alphabetically)

AUB Group
Australia
Financials
Aussie Broadband Pty Ltd
Australia
Communication Services
Carsales Com LTD
Australia
Communication Services
Charter Hall Group
Australia
Real Estate
EBOS Group Ltd
New Zealand
Health Care
EQT HOLDINGS LTD
Australia
Financials
Hansen Technologies
Australia
Information Technology
Healius Ltd
Australia
Health Care
MA Financial Group Ltd
Australia
Financials
Uniti Wireless Ltd
Australia
Communication Services

PROFILE

Platform Availability

  • AET Wholesale Access Fund
  • Asgard Element (Masterfund)
  • Asgard Infinity
  • BT Investment Wrap
  • BT Super Wrap
  • BT Panorama
  • Colonial First Wrap -Super/pension
  • Centric IDPS
  • Centric Super
  • Hub24
  • IOOF Portfolio Service
  • IOOF Core
  • IOOF Pursuit Select
  • IOOF Grow Wrap
  • Macquarie Wrap
  • MLC Wrap/Navigator
  • Mason Stevens
  • Netwealth
  • OneVue
  • Praemium
  • uXchange
  • Wealthtrac

FEATURES

  • APIR CODE PER0270AU
  • REDEMPTION PRICEA$ 2.7501
  • FEES * Management Fee: 1.3340%
    Performance Fee: 20.5% of the performance above the benchmark
  • FUM AT MONTH END A$ 855.45m
  • STRATEGY INCEPTION DATE 1 November 2004
  • BenchmarkS&P/ASX Small Ordinaries Accumulation Index

Fund Managers

Ed Prendergast

Senior Fund Manager

Steve Black

Senior Fund Manager

Description

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.

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

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.