Axiom International Ethical Fund (Hedged)

An option of HEDGED or UNHEDGED portfolios of dynamic and growing companies undergoing positive change, within a robust ethical framework.

December 2022 - Monthly REPORT

China's re-opening brings new opportunities for 2023


  • Equity markets fell back in December upon fears that global interest rates would remain elevated throughout 2023
  • The ending of China’s zero-Covid policy is expected to increase medium-term global growth
  • The Fund returned -6.4% in December, while the benchmark returned -4.8%


Top Holdings (alphabetically)

AIA Group Ltd
Hong Kong
AIA Group Limited operates as an insurance company. The Company offers life, critical illness, accident, disability protection, savings, and medical insurance services. AIA Group serves customers worldwide.
Asml Holdings
Information Technology
ASML Holding N.V. develops, produces, and markets semiconductor manufacturing equipment, specifically machines for the production of chips through lithography. The Company services clients worldwide.
United States
Health Care
Danaher Corporation designs, manufactures, and markets professional, medical, industrial and commercial products, and services in the sectors of test and measurement, environmental, life sciences, dental, and industrial technologies.
Eli Lilly & Co
United States
Health Care
Eli Lilly and Company discovers, develops, manufactures, and sells pharmaceutical products for humans and animals. The Company products are sold in countries around the world. Eli Lilly products include neuroscience, endocrine, anti-infectives, cardiovascular agents, oncology, and animal health products.
Estee Lauder Cos Inc
United States
Consumer Staples
The Estee Lauder Companies Inc. manufactures and markets a wide range of skin care, makeup, fragrance, and hair care products. The Company's products are sold in countries and territories around the world.
Gartner Inc
United States
Information Technology
Gartner, Inc. provides research and analysis on the computer hardware, software, communications, and related information technology industries. The Company's business segments includes research, consulting, measurement, events, and executive programs.
Hermes International
Consumer Discretionary
Hermes International designs, produces, and distributes personal luxury accessories and apparel. The Company operates a chain of boutiques under the Hermes name that sells items such as leather, scarves, men's clothes, ties, women's fashions, perfume, watches, stationery, shoes, hats, gloves, and jewelry products.
United States
Information Technology
Microsoft Corporation develops, manufactures, licenses, sells, and supports software products. The Company offers operating system software, server application software, business and consumer applications software, software development tools, and Internet and intranet software. Microsoft also develops video game consoles and digital music entertainment devices.
Novo Nordisk
Health Care
Novo Nordisk A/S develops, produces, and markets pharmaceutical products. The Company focuses on diabetes care and offers insulin delivery systems and other diabetes products. Novo Nordisk also works in areas such as haemostatis management, growth disorders, and hormone replacement therapy. The Company offers educational and training materials. Novo Nordisk markets worldwide.
Visa Inc
United States
Information Technology
Visa Inc. operates a retail electronic payments network and manages global financial services. The Company also offers global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities.

Sector Breakdown

Capitalisation Breakdown

Region Breakdown




Pengana Axiom International Ethical Fund (Hedged)1

The Class was established in 1 July 2017. From June 2021 Axiom was appointed as the investment manager for the Fund.

1M 1Y
Axiom Appointed
June 2021
3Y 5Y
Since Fund
July 20173
Since Strategy
July 20044
Fund: APIR (HHA0002AU)2,3

Managed by Axiom from June 2021
-6.4% -34.0% -15.8% -3.0% 2.1% 3.3%
Current Strategy (Partial Simulation)5

Axiom Global Equity Strategy
2.4% 4.1% 6.5% 8.6%
Index (Hedged)6 -4.8% -17.7% -7.0% 4.7% 5.4% 7.0% 8.8%

Swipe horizontally to see all columns




Equity markets fell back in December, as the MSCI World All Countries Total Return Index AUD dropped 4.8%.

During December, the portfolio underperformed the benchmark by 1.6%. Global value stocks outperformed growth by 3.2% in Australian dollar terms as global central bank monetary policy remained restrictive.

US consumer price inflation fell to 7.1% year-on-year from 7.7% the previous month, which was below expectations of 7.3%. Core inflation, which excludes the more volatile food and energy items, also moderated.

The US Federal Reserve raised interest rates by 0.50% as expected at its December meeting. The slightly less “hawkish” commentary indicated that the pace of rate hikes could start to slow in the near-term. The US dollar fell by more than 2% in December, while commodity prices were also broadly lower.

Economic growth remains under pressure across all the major economies, with manufacturing especially weak. However, China suddenly abandoned its zero-COVID policy and eased most restrictions at the start of December. This is expected to boost the global economy.

The Fund retains its focus on dynamic growth stocks as positive revisions to earnings-per-share (EPS) should continue to drive outperformance as the economy enters a period of weaker overall earnings growth. The Fund continues to overweight information technology, health care and consumer discretionary, while underweighting financials, energy, and materials.

The Fund’s overweight position in health care contributed to relative returns, while stock selection in information technology and financials also contributed positively. Stock selection in consumer discretionary, industrials and materials were the main detractors from relative returns.

Overweight positions in AIA Group, Novo Nordisk, and Estee Lauder were the strongest contributors to relative performance, while positions in Tesla, Costco, and TE Connectivity were the most significant detractors.

AIA Group and Estee Lauder both benefited from the easing of COVID restrictions in China, which has improved the long-term prospects of an economic recovery in the country.

Analysis of Novo Nordisk weekly prescription data continues to exceed expectations. Consequently the Fund has increased its position in the stock.

Tesla continued to underperform the market in December as the company announced the price of its vehicles in China would be further reduced. Corporate governance concerns grew further, especially relating to the amount of time that CEO Elon Musk is currently spending on Twitter following his recent acquisition of the company. Consequently, the Fund has further trimmed its position in Tesla.

In December Costco reported earnings results that were largely in line with investor expectations. Gross margins were better than analysts had feared, but slightly lower than forecast, leading to the Fund reducing its position in the stock.

TE Connectivity underperformed following weaker-than-expected fourth quarter order guidance within its industrial business. Automotive, which accounts for approximately 50% of total revenue, demand remains firm as the key trends of electrification and enhanced automated safety features drive increasing electric connector content in each vehicle.

The Fund’s sector exposures were broadly unchanged during the month. The underweight position in communication services and the overweight position in health care increased, while the overweight positions in information technology and consumer discretionary decreased.

Tesla, Costco, and TE Connectivity, as previously mentioned, were the largest position reductions during the month. The largest position increases were Baidu, AIA, and Novo Nordisk. The holding in Chinese internet search company Baidu was established in November, and was increased after COVID-related restrictions were eased. Economic recovery in China is expected to support an improvement in digital advertising revenues.

A new position was initiated in, a Chinese e-commerce company that will benefit as China’s economy recovers. Cost controls that were instituted during the period of zero-COVID policy in China should also improve its operating leverage. China’s reopening is expected to bring a rebound in consumer spending. This is likely to occur faster than is currently reflected in consensus expectations. is currently valued at an attractive discount to the company’s historical average price-earnings multiple. The Fund expects this discount to narrow over time, as earnings growth re-accelerates and performance improves.

Nvidia designs and develops graphics processing units (GPUs) for data centres, gaming, and auto applications. Following significant weakness in many of its end markets, the company can be expected to accelerate growth in excess of the market consensus forecast. Furthermore, the market valuation is now much more attractive than that seen over the past two years.

During December Hermes’ ESG rating was upgraded to AA from A by MSCI following notable improvements in its labour management practices. Axiom engaged with Hermes on ESG matters twice over in 2022 within its regular engagement process. The September meeting focused on labour practices, specifically retention, training and employee morale. This included incentive programs and training that the company had recently instituted to increase productivity.

MSCI upgraded Amazon to A from BBB after it disclosed a policy to provide whistleblowers with protection from retaliation. Axiom has also engaged with Amazon on ESG matters. In September 2022 the company indicated that some of its policies and procedures were not being reflected in the MSCI report, most notably its code of conduct policies on bribery, anti-corruption and whistleblower protection.

Logistics real estate investment trust Prologis was upgraded to AA from A by MSCI after it disclosed a policy that provides whistleblowers with protection from retaliation. Furthermore, members of the company’s board of directors were no longer deemed to be over-boarding, i.e. taking on excessive levels of external board commitments.

MSCI upgraded STMicroelectronics to AAA from AA following improvements in board composition and the alignment of its performance pay structure to shareholder outcomes, which leads global peers.

No positions were downgraded during the month.





  • FEES * Management Fee: 1.35% p.a
  • Minimum initial investment $10,000
  • FUM AT MONTH END A$ 39.01m
  • BenchmarkMSCI All Country World Total Return in AUD (Hedged)

Fund Managers

Bradley Amoils

Managing Director/Portfolio Manager

Andrew Jacobson

CEO/Chief Investment Officer


The Pengana Axiom International Ethical Fund (Hedged) invests in companies that are dynamically growing and changing for the better, more rapidly than generally expected and where the positive changes are not yet reflected in expectations or valuation.

The Global Equity Strategy seeks dynamic growth by concentrating its investments in global developed markets, and may also invest in companies located in emerging markets.

The investment manager is Axiom Investors, a Connecticut-based global equity fund manager formed in 1998 with over US$19billion in assets under Management.


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High Conviction Property Securities Fund
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Private Equity Trust (ASX: PE1)
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Alpha Israel Fund
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1. From 4 June 2021 the capital component of the foreign currency exposure for the Fund is hedged back to Australian dollars.
2. Axiom was appointed fund manager as of 5 May 2021. June 2021 represents the first full month of Axiom managing the Fund.
3. Inception date 1 July 2017. Figures shown are calculated from the continuous performance of both the current and previous strategies. For performance see row labelled Fund: APIR (HHA0002AU) in the table above which is the continuous performance of both the current and previous strategies.
4. Axiom Global Equity Strategy inception 1 Jul 2004.
5. Prior to 1 June 2021, the Axiom Global Equity Strategy performance (labeled ‘Current Strategy (Partial Simulation)’ and shown in the shaded area) includes the strategy performance simulated by Pengana from the monthly gross USD returns of the Axiom Global Equity strategy. The Axiom Global Equity Strategy performance does not include the Pengana ethical screen
6. Prior to 4 June 2021 hedged performance has been simulated by Pengana for both the Fund and Index. This was done by: 1) using 3 month rolling forwards to hedge movements in the AUD/USD spot rate, and 2) deducting the Pengana International Ethical Fund (Hedged) management fee of 1.35% p.a. from the Fund’s performance.
From 4 June 2021, index performance is from the MSCI All Country World Total Return in AUD (Hedged). Prior to 4 June 2021, index performance is simulated from the MSCI All Country World Total Return in USD
7. Performance for periods greater than 12 months are annualised. 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.
8. Annualised standard deviation since inception.
9. Relative to the MSCI All Country World Total Return in AUD (Hedged).
*For further information regarding fees please see the PDS available on our website.