During December 2021, the Pengana Axiom International Ethical Fund (“Fund”) underperformed the benchmark, the MSCI All Country World Index (“Index”), in AUD terms.
The Fund underperformed as value stocks showed some renewed strength into year-end due to inflation concerns, continued strong global growth, and potential central bank tightening measures causing global interest rates to increase. There are also some early signs that these reflationary tailwinds will continue to hurt our dynamic growth names as these factors crest into the first half of 2022. Underperformance was driven by stock selection in information technology and underweight to interest-rate-sensitive financials. The Fund continues to be the most overweight information technology, consumer discretionary and communication services, and underweight financials, materials, and consumer staples.