CLOSE
BACK

OUR FUNDS

CLOSE

Alpha Israel Fund

An Israeli equity fund investing in cutting edge technologies

October 2022 - Monthly REPORT

Signs of easing global inflation pressures

SUMMARY

The Fund returned 1.1% (Class A, AUD) and 1% (Class B, USD) in October, while the TA 125 Index returned 4%. The Fund rebounded as global equity markets recovered upon expectations that lower US inflation would lead to an easing of the pace of global interest rate increases and a lower peak next year.
Shares in Israel’s technology sector remain volatile but are above the lows which the market reached in the middle of the year.

We recently held a Portfolio and Investment Update webinar, along with Q&A for shareholders, which is available below for your review. CPD points are applicable for Australian Financial Planners HERE. 

PORTFOLIO

Top Holdings (alphabetically)

Bank Hapoalim BM
Israel
Diversified Banks
Bank Hapoalim B.M. attracts deposits and offers personal, corporate and institutional banking services. The Bank offers corporate finance, cash management, foreign exchange, investment advice, loans, securities brokerage, custody services, investment banking, foreign trade financing, and treasury services. Bank Hapoalim operats in Israel, the Americas, and Europe.
Camtek
Israel
Semiconductor Equipment
Camtek Ltd designs, develops, manufactures, and markets automated optical inspection and metrology systems. The Company provides software solutions for the semiconductor industries, enabling manufacturers to improve yield and lower their production costs. Camtek serves semiconductors industry worldwide.
Check Point Software Technologies
Israel
Systems Software
Check Point Software Technologies Ltd. develops, markets and supports a range of software and hardware products and services for information technology (IT) security and offers its customers a network and gateway security solutions, data and endpoint security solutions and management solutions.
Kenon Holdings Ltd
Singapore
Independent Power Producers & Energy Traders
Kenon Holdings Limited operates various businesses worldwide. The Company's businesses engage in the development and operation of power generation facilities in Latin America, the Carribbean, and Israel. Kenon also owns businesses in the automotive, foundry manufacturing, international shipping, and solar technology industries.
Medi Power
Israel
Diversified Real Estate Activities
Medipower (Overseas) Public Co. Limited operates as a full-service commercial real estate firm. The Firm owns and manages retail properties, shopping centers, and residential developments. Medipower serves customers worldwide.

Sector Breakdown

Capitalisation Breakdown

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 31 Oct 20221

Alpha Israel Fund Class A (AUD)

1 MTH 1 YEAR 2 YEARS P.A. 3 YEARS P.A. SINCE INCEPTION P.A.
Alpha Israel Fund Class A 1.1% 1.1% 5.7% 5% 7.5%
Tel Aviv Stock Exchange 125 Index 4% 1.6% 19.4% 7.5% 7.8%

Swipe horizontally to see all columns

Alpha Israel Fund Class B (USD)

1 MTH 1 YEAR 2 YEARS P.A. 3 YEARS P.A. SINCE INCEPTION P.A.
Alpha Israel Fund Class B 1% 1.6% 6.6% 7.1% 8.5%
Tel Aviv Stock Exchange 125 Index 4% 1.6% 19.4% 7.5% 7.8%

Swipe horizontally to see all columns

Performance Chart

NET PERFORMANCE SINCE INCEPTION2

COMMENTARY

The Israeli economy is highly integrated into the global economy, and equities were positively impacted by signs of easing global inflation pressures.

Israel’s economic fundamentals appear strong relative to the major developed markets. The economy grew strongly in 2021 as it exited COVID and has remained robust this year, expanding 3.9% year-on-year in the September quarter.

September inflation was unchanged in September at 4.6% but above market expectations of 4.5%. While it has trended upwards this year, it remains well below current levels in the US and most of Europe.

The Bank of Israel increased interest rates by a further 0.75% in October to 2.75%. However, the unprecedented fiscal surplus, which is forecast to fall to 63% of GDP in 2023, reduces some of the pressure for larger rate increases.

This is expected to impact the economy over coming quarters. The slowdown in global demand will further slow the Israeli economy, which is heavily dependent on exports. Growth of 6.0% is expected this year, falling to 3.5% in 2023.

The country’s energy security was further strengthened when it signed an agreement to settle the maritime boundary with Lebanon and agree plans for natural gas production. French energy group Total is expected to begin exploration work shortly in the area.

Market sentiment was boosted when the Israeli autonomous vehicle company “Mobileye” was listed with a valuation above US$16.5 billion. This was the largest initial public offering (IPO) in the US this year and exceeded the acquisition price paid by Intel some years ago.

Portfolio Commentary

The main contributors to performance last month were in the technology sector and included InMode” (+17%), Perion (+17%) and Checkpoint (+16%). The main detractor was the real estate company Electra, which fell by 10%.

Ithica which is held in the Delek portfolio company is scheduled to be listed with an IPO at the end of November, a valuation of US$3 billion is expected. Whilst this is a respectable valuation level, the stock retains the potential for further valuation growth.

The Fund retains its high exposure to energy companies, increasing its positions in Tamar Petroleum and Leviathan.

Companies with exposure to rising commodity prices or reliable cash flows and reasonable valuation levels including energy, utilities and healthcare outperformed in the third quarter. These are expected to do well over the rest of this year.

The benchmark risk of rising technology stock valuations is being managed through a call spread option strategy on the Nasdaq index.

Stock in focus

Perion is a global technology company that utilises artificial intelligence and machine learning to optimize digital advertising, search, and publishing platforms.

Its proprietary technology comprises a range of tech-enabled capture and business solutions. It uses unique data, machine learning algorithms, and creative technologies to understand user intent and behaviour.

The company has expanded its capabilities to include social networks, desktop advertising, content sites, and e-commerce. Perion has developed advertising on smart TVs, a channel for which the advertiser is willing to pay a premium as it receives quality exposure to the target audience. It has also developed search advertising through its long-standing collaboration with Microsoft.

Its vast amount of data supports a digital advertising platform that does not depend on third-party cookies, which removes the risk of interventions by Google.

The company has a market value of approximately US$1 billion, has net cash of US$350 million, and currently trades at a multiple of just 10 times earnings.

PROFILE

FEATURES

  • APIR CODE PCL6469AU (USD Class) CTS0045AU (AUD Class)
  • REDEMPTION PRICEClass A: A$1.0111
    Class B: U$1.0276
  • FEES * Management Fee: 1.50% p.a. paid monthly in arrears
    Performance Fee: 20% above the Hurdle with a high water mark, paid semi-annually in arrears
  • Minimum initial investment $250,000
  • STRATEGY INCEPTION DATE 1 January 2018
  • BenchmarkThe goal of the Fund is to achieve long term capital growth by investing In Israeli and Israeli related companies, generating returns that consistently outperform the relevant benchmarks. Returns are not guaranteed.

Fund Managers

Gabi Dishi

Founder & CEO

Michael Weiss

Founder & Managing Partner

Aviran Revivo

Managing Partner

Sagi Ben Yosef

Managing Partner

Description

The Pengana Alpha Israel Fund invests in listed Israeli companies that produce cutting edge – both high and low tech – technologies. These Israeli listed companies have developed solid intellectual property coupled with strong global distribution.

The Fund offers Australian investors diversification within global equity exposure to a unique and promising market that is very much skewed to industries and technologies that are either limited, or do not exist, in the Australian market place, such as: the semiconductor industry, solar and water treatment technology, aerospace and electronic defence industries, and cyber security technologies.

EXPLORE OUR FUNDS

Harding Loevner International Fund
Harding Loevner International Fund
Axiom International Ethical Fund
Axiom International Ethical Fund
Axiom International Ethical Fund (Hedged)
Axiom International Ethical 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

1.Net performance figures are shown after all fees and expenses, and assume reinvestment of distributions. Performance figures are calculated using net asset values after all fees and expenses, and assume reinvestment of distributions. Index returns shown are in ILS (Israeli Shekel). 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 1st January 2018.
3. Annualised Standard Deviation since inception
4. Relative to Tel Aviv Stock Exchange 125 Index

Please note: This fund is only open to Wholesale Investors.