The Fund rose 2.2% in August, outperforming the Small Industrials by 3.7% and outperforming the Small Ordinaries by 3.5%. For the 12 months to August, the Fund was up 5.5%, outperforming the Small Industrials Index by 3.3% and outperforming the Small Ordinaries Index by 6.7%.
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 faded in August driven by concerns over the Chinese economy and fears the Federal Reserve might hold rates high for longer than feared. The US market fell 1.7%, while the Australian market showed a 1.4% decline. The A$ was down 4% on concerns over the Chinese growth outlook, which also saw copper prices fall 5%. The local share market was dominated by profit season, with most of our companies reporting solid numbers and outlook commentary. We have been busy meeting management teams and were generally pleased with performance in this critical month.
Our positive contributors in August included:
Carsales (+16%) posted solid results with profit growth of 43% and a robust outlook for growth in all four regions the company operates in. AUB Group (+8%) upgraded earnings again, with the market taking comfort from the especially strong performance in the recently acquired UK operations. Aussie Broadband (+30%) revealed 51% profit growth and an improved outlook for the current financial year. Healthia (+76%), which is a very small position for us, received a takeover offer from a private equity group at a significant premium. Seven Group (+7%) posted 18% profit growth driven by consistently strong outcomes from Westrac and Coates Hire.
Our negative contributors in August included:
Webjet (-11%) held its AGM which showed a continuation of the impressive growth reported in May, however after a 14% rally in July, the stock retraced, perhaps suggesting some short term hope of a profit upgrade that did not occur. IVE Group (-9%) drifted after revealing mild slippage in the earnings from the recently acquired Ovato operations. Kelsian (-9%) drifted following a profit result somewhat hamstrung by the ongoing shortage of bus drivers in Australia. Pinnacle Investments (-9%) underperformed a slightly weak market given the earnings leverage to asset prices. Australian Clinical Labs (-9%) revealed a lighter than expected profit outcome due to rising costs.