Axiom International Ethical Fund

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

August 2023 - Monthly REPORT

August Report


  • Global equity markets moved lower in local currency terms during August, following the strong recovery in share prices over recent months.
  • The global economy continued to slow and rising inflationary pressures pushed up longer-term bond yields, impacting share prices.
  • US dollar strength and China’s sluggish economy weakened the Australian dollar, supporting returns in AUD terms; the Portfolio returned 2.9% in August, while the benchmark returned 1.1%.

We are pleased to present a series of short articles in our latest published feature from the Pengana Axiom International Fund.


Top Holdings (alphabetically)

Alphabet Inc
United States
Communication Services
Alphabet Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products. Inc
United States
Consumer Discretionary, Inc. is an online retailer that offers a wide range of products. The Company products include books, music, computers, electronics and numerous other products. Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers. Amazon also operates a cloud platform offering services globally.
Apple Inc
United States
Information Technology
Apple Inc. designs, manufactures, and markets personal computers and related personal computing and mobile communication devices along with a variety of related software, services, peripherals, and networking solutions. Apple sells its products worldwide through its online stores, its retail stores, its direct sales force, third-party wholesalers, and resellers.
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.
Hermes International SCA
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.
Microsoft Corp
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 A
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.
United States
Information Technology
NVIDIA Corporation designs, develops, and markets three dimensional (3D) graphics processors and related software. The Company offers products that provides interactive 3D graphics to the mainstream personal computer market.
ServiceNow Inc
United States
Information Technology
ServiceNow, Inc. provides enterprise information technology (IT) management software. The Company designs, develops, and produces prepackaged computer software, cloud services, and IT service management platform. ServiceNow serves customers throughout the United States.
Visa Inc
United States
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

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

1M 1Y 2Y
Axiom Appointed
June 20211
3Y 5Y
Since Fund
July 20172
Since Strategy
July 20043
Fund: APIR (HOW0002AU)1,2

Managed by Axiom from June 2021
2.9% 22.4% -4.9% 4.8% 7.2% 8.6% 9.6%
Current Strategy (Partial Simulation)4

Axiom Global Equity Strategy
7.1% 9.8% 12.6% 8.1%
Index5 1.1% 20.6% 4.0% 8.4% 12.1% 9.9% 11.4% 7.8%

Swipe horizontally to see all columns




Global share markets unwound some of the gains of recent months in August, as a rebound in inflationary pressures raised concerns that global interest rates would remain higher for longer. The slowdown in consumer spending led to value stocks underperforming growth during the month. US inflation increased to 3.2% year-on-year in July from 3.0% in June, helping the US dollar increase by 1.7% against its trade-weighted index in August. Meanwhile, commodity prices were also broadly stronger in August compared to July.

Global economic activity continued to moderate in July compared to June, with Eurozone composite data and US manufacturing new orders both indicating economic contraction.

China’s manufacturing activity returned to expansion, although the broader “re-opening” performance post zero-COVID has largely remained subdued. Travel and entertainment were the strongest performing sectors as consumer spending remained sluggish. China’s highly leveraged property-sector continued to slow the economy.

The Fund retains its focus on dynamic growth stocks whose positive revisions to earnings per share (EPS) drive outperformance as global economic growth moderates. The Fund continues to overweight information technology, health care, and consumer discretionary, while the largest underweight sectors are financials, energy, and materials.

Strong stock performance in health care, consumer discretionary, and consumer staples contributed to relative returns. Weak stock selection in financials and a zero weighting to energy were the main detractors.

US-based pharmaceutical company Eli Lilly announced strong second quarter earnings, driven by sales of the obesity drug Mounjaro; it also raised its full year earnings guidance. This positive outlook is supported by the Fund’s own weekly tracking of pharmacy script data which also shows distribution of Mounjaro continuing to accelerate.

US-based luggage manufacturer and retailer Samsonite also delivered strong second quarter earnings ahead of investor expectations and provided improved forward guidance. The company continues to benefit from the strong rebound in global travel and is benefitting from improved margins following earlier cost savings, bringing significant further upside potential.

Emerging US-based cosmetics brand e.l.f. Beauty outperformed after it announced the acquisition of Naturium, which will double its presence in the skincare market. Skincare is particularly attractive for e.l.f. and the acquisition appears to fit well with its other brands.

Netherlands-based digital payments group Adyen announced disappointing half-year earnings results, with lower than expected total payment volumes. The company attributed this to increased competition in the US, slower eBay trends, and macroeconomic headwinds. More specifically, digital payment volumes were impacted by increasingly competitive pricing in North America, as enterprises focus on cost optimization and competitors are more willing to reduce prices. Adyen has confirmed it will not adopt a lower pricing strategy, suggesting that volumes are likely to remain under pressure in the short term.

Weakness in Japanese entertainment and electronics group Sony’s share price resulted from lower than expected second half-year earnings results. Profitability was particularly weak in the semiconductor image sensor segment due to the slowdown in the smartphone market.

French luxury goods company Hermes underperformed despite reporting stronger than expected first-half year earnings results. Leading competitors such as LVMH and Richemont highlighted slowing trends in Europe and a more gradual recovery in the Chinese consumer sector.

The Nvidia position was increased ahead of the earnings results as the Fund’s tracking of foundry procurement data showed incremental order increases for 5nm semiconductor capacity. This further supported the likelihood of a positive earnings surprise in late August. The Fund also continued to add to its Amazon position after its cloud growth exceeded market expectations in the second quarter earnings report.

The position in Dutch technology group STMicro was reduced upon concerns about its automotive business following weaker than expected earnings guidance from its peers Analog Devices and Microchip. The Fund also trimmed its position in Hong Kong-based life insurer and wealth manager AIA, reflecting increasing concerns for China’s property market.

The Fund established a position in the Italian luxury sports car manufacturer Ferrari, which has an extremely strong global brand and a waiting list for vehicles in excess of two years. The Fund’s modelling shows significant scope to increase earnings as personalisation becomes a larger part of the business. Currently, personalisation represents just 15% of car and spare parts sales but generates 50-90% gross profit margins.

The Fund also established a position in US-based Cadence Design Systems, which is a leader in electronic design automation. Its software provides the basic building blocks for designing a semiconductor device, such as placing and routing transistors on a chip. There is limited competition in the electronic design automation industry and the company has historically shown resilient growth through business cycles.

The Fund exited its position in US-based multinational cosmetics company Estee Lauder. The company had reported disappointing second quarter earnings and issued forward guidance which was way below investor expectations. While the brand does not appear to be impaired, the company must address several near-term issues that will likely impact its margins for longer than initially expected.

During August, US-based logistics real estate investment trust Prologis’ ESG rating was downgraded to A from AA by MSCI. Human capital management initiatives were found to just be in line with the industry peer group, rather than ahead of it. The company appears to lag industry peers in offering support for degree programs, and its non-salary benefits appear limited to some employees. The Fund plans to engage with the company to better understand what programs it offers to employees and if it has any plans to increase benefits.

The Fund held ESG engagement conversations with the management teams of Microsoft and Taiwan Semiconductor Manufacturing Corp (TSMC) during August. In conversation with TSMC, it became apparent that the company offers a wide range of learning resources to all employees (both full and part-time employees and also contractors). The learning content and approaches cater to the needs of individuals and organisations. This is not reflected in MSCI’s ESG reporting, so the Fund urged the management team to engage with MSCI to potentially improve its rating.





  • FEES * Management Fee: 1.35% p.a
  • Minimum initial investment $10,000
  • FUM AT MONTH END A$ 316.81m
  • BenchmarkMSCI All Country World Total Return Index (net, AUD)

Fund Managers

Bradley Amoils

Managing Director/Portfolio Manager

Andrew Jacobson

CEO/Chief Investment Officer


The Pengana Axiom International Ethical Fund 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.


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
Pengana Diversified Private Credit Fund
Pengana Diversified Private Credit Fund

Prior to June 2021, the Axiom Global Equity Strategy performance (shown in the shaded area) includes the strategy performance simulated by Pengana from the monthly gross returns of the Axiom Global Equity strategy. This simulation was done by: 1) the conversion of US-denominated gross returns to AUD, 2) applying the fee structure of the stated class. The simulation does not include the Pengana ethical screen. From June 2021 the strategy performance is the performance of the Pengana Axiom International Ethical Fund.

1. Axiom was appointed fund manager as of 5 May 2021. June 2021 represents the first full month of Axiom managing the Fund.
2. 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 (HOW0002AU) in the table above which is the continuous performance of both the current and previous strategies.
3. Axiom Global Equity Strategy inception 1 Jul 2004.
4. Prior to June 2021, the Axiom Global Equity Strategy performance (labeled ‘Strategy (Partial Simulation)’ and shown in the shaded area) includes the strategy performance simulated by Pengana from the monthly gross returns of the Axiom Global Equity strategy. This simulation was done by: 1) the conversion of US-denominated gross returns to AUD, 2) applying the fee structure of the stated class. The simulation does not include the Pengana ethical screen. From June 2021 the strategy performance is the performance of the Pengana Axiom International Ethical Fund.
5. MSCI All Country World Total Return Index in AUD.
6. 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.
7. Annualised standard deviation since inception.
8. Relative to the MSCI All Country World Total Return Index in AUD.
*For further information regarding fees please see the PDS available on our website.