The Fund delivered a return of -2.7% in the month of December. By way of comparison, the ASX 300 Accumulation Index declined by -2.0% in December.
We enter the new year in a very different position to this time last year. At 31 December 2018, the market had fallen by >8% in the preceding quarter, amidst political instability – both domestically and abroad – falling house prices, and weak consumer sentiment.
Fast forward 12 months and the domestic political environment has stabilised, successive cuts in interest rates, tax cuts and easing lending conditions have once again led to rising house prices and overall improved confidence levels. These factors have also supported a domestic equity market which has risen by 26% over the calendar year.
That said, corporate earnings have actually fallen over the same period, meaning the rise in share prices is being entirely driven by PE multiple expansion. The ASX 200 re-rated from 14.1x forward earnings to 17.5x through 2019 (Industrials ex Financials re-rated from 18.9x to 25.4x) – both at multi decade highs.
Despite the improved conditions compared with a year ago, we view the market as being expensive. We continue to maintain a defensive bias to the portfolio and exit the year with cash levels of 13%. January is typically a quiet month in the market, before company reporting season commences in February, where we look for validation of our investment theses and opportunities to deploy capital consistent with our investment criteria, with after tax cash earnings yield continuing to be our main focus for valuation.
||ANZ Banking Group||Australia||Financials|
||Charter Hall Long Wale REIT||Australia||Real Estate|
||Spark New Zealand Ltd||New Zealand||Communication Services|
||Viva Energy REIT||Australia||Real Estate|
|1 Month||1 Year||SINCE INCEPTION|
|RBA Cash Rate||0.1%||1.2%||1.4%|
|ASX 300 Accumulation Index||-2.0%||23.8%||11.6%|
|VOLATILITY3||8.3%||NUMBER OF STOCKS||29|
|MAXIMUM DRAW DOWN||-12%|
Fund Manager and Investment Analyst
Fund Manager and Investment Analyst
The strategy invests in a high conviction portfolio of Australian listed securities with sustainable and growing income streams. The Fund targets capital preservation over supernormal returns, through a consistent focus on the security selection process and careful management of portfolio exposure. The Fund seeks to generate consistent returns with a high component of the return from income, using fundamental company research to uncover investment opportunities. The Fund is managed by the Pengana Australian Equities team.
|Alpha Israel Fund||International Fund||High Conviction Property Securities Fund||Australian Equities Fund|
|International Fund - Ethical||Global Small Companies Fund||WHEB Sustainable Impact Fund||Emerging Companies Fund|
|Emerging Companies Fund||High Conviction Equities Fund||Australian Equities Income Fund||Pengana International Equities Limited (ASX: PIA)|
|International Fund - Ethical Opportunity||Private Equity Trust (ASX: PE1)|
1. Net performance figures are shown after all fees and expenses, and assume reinvestment of distributions. Past performance is not a reliable indicator of future performance, the value of investments can go up and down.
2. A new strategy was implemented from 1 August 2017 by the Pengana team. The financial information refers to this strategy. For full performance history of the prior strategy please refer to the Pengana website.
3. Annualised standard deviation since inception.
4. Relative to ASX 300 Accumulation Index.
* For further information regarding fees please see the PDS available on our website.