The Fund rose 3.8% in November, outperforming the Small Industrials by 1.0% and underperforming the Small Ordinaries by 1.2%. For the 12 months to November, the Fund was down 17.6%, outperforming the Small Industrials Index by 0.8% and underperforming the Small Ordinaries Index by 3.6%.
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
Global markets rallied in November on the back of falling bond yields and the seeming likelihood that China would relax its zero tolerance policy on COVID. The US market rose 5.4% while the Chinese market rallied 9%. The Australian market gained 6.6%, with mining stocks up 18% as markets see the potential for a China re-opening as a positive driver of commodity demand. The smallcap sector saw a similar trend, rising 4.9%, with mining stocks strongly outperforming.
Our key positive contributors in November were:
Gentrack (+64%) upgraded its long-term revenue forecasts following the re-alignment of its software products and sales focus. Seven Group (+14%) posted positive commentary at its AGM with the key operating divisions (Westrac and Coates Hire) growing profits above 10%. AUB (+12%) continues to recover from a period of underperformance as the market gains comfort with the recent Tysers acquisition in the UK. Carsales (+12%) revealed at its AGM that the business is growing profits at 13% in the first quarter and is on track to meet forecasts. Kelsian (+17%) bounced after the retention of two ferry contracts and the expectation of larger opportunities for bus operations in Sydney.
Our key detractors in November were:
City Chic (-39%), which is a small position in the Fund, posted softer than expected sales in the US and Europe as consumer sentiment has turned negative. Healius (-15%) and Capitol Health (-6%) have seen cost inflation in their core operations, which is proving difficult to recover. IPH Holdings (-8%) fell as the A$ rose 7% during the month and the company generates a large proportion of its revenues in USD. Propel Funerals (-2%) drifted given its defensive revenue streams compared to a shorter term focus on stocks which have the leverage to an improvement in economic activity.