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Axiom International Ethical Fund

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

December 2021 - Monthly REPORT

Value stocks showed some renewed strength into year-end

SUMMARY

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.

PORTFOLIO

Top Holdings (alphabetically)

Adobe Inc
United States
Information Technology
Alphabet Inc
United States
Communication Services
Amazon
United States
Consumer Discretionary
Asml Holdings
Netherlands
Information Technology
Danaher
United States
Health Care
Estee Lauder Cos Inc
United States
Consumer Staples
Microsoft
United States
Information Technology
ServiceNow Inc
United States
Information Technology
TE Connectivity
United States
Information Technology
Tesla Inc
United States
Consumer Discretionary

Sector Breakdown

Capitalisation Breakdown

Region Breakdown

PERFORMANCE

PERFORMANCE SINCE STRATEGY INCEPTION

NET PERFORMANCE FOR PERIODS ENDING 31 Dec 20216

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

Managed by Axiom from June 2021
-3.1% 21.4% 24.6% 20.8% 15.6%
Current Strategy (Partial Simulation)4

Axiom Global Equity Strategy
27.2% 26.9% 20.0% 19.7% 9.4%
Index5 1.4% 13.9% 25.8% 19.1% 14.7% 14.3% 8.2%

Swipe horizontally to see all columns

PERFORMANCE SINCE STRATEGY INCEPTION

NET PERFORMANCE SINCE INCEPTION6

COMMENTARY

At the stock level, Adobe, Square (now renamed Block), and Sea were significant detractors. Adobe reported in-line quarterly results that disappointed some investor expectations as their single application business saw less of a holiday sales boost compared to previous years.  Initial forward guidance was also conservative, but we expect Adobe to surprise positively during the upcoming year driving high-single-digit potential earnings and FCF positive surprise. We have downgraded the stock to an A1 (from A2).  Estee Lauder, Atlas Copco, and Live Nation were top performers. The travel sector and post-COVID reopening names recovered in December as cyclicals moved up.

We initiated a new position in the Denmark-based diabetic care franchise Novo Nordisk based on positive surprise potential from their new weight loss and Type 2 GLP products.  Our forecasts are 7% and 12% respectively ahead of consensus expectations for FY2022 and FY2023 EPS.

We continued to reduce the positions in Sea, Moderna, and RingCentral while we added to more dynamic names Tesla and TE Connectivity.  The transition to battery electric vehicles continued to show positive surprise particularly for deliveries of Tesla’s Model 3 and Model Y cars. We also added to the position in Recruit Holdings, an online digital job posting site, that operates the Indeed digital recruiting platform in the US.

PROFILE

STATISTICAL DATA2

PORTFOLIO SUMMARY
VOLATILITY7
9.7%
NUMBER OF STOCKS
47
BETA8
0.75

FEATURES

  • APIR CODE HOW0002AU
  • REDEMPTION PRICEA$ 3.2914
  • FEES * Management Fee: 1.35% p.a
  • Minimum initial investment $10,000
  • FUM AT MONTH END A$ 388.29m
  • STRATEGY INCEPTION DATE 1 July 2004
  • BenchmarkMSCI All Country World Total Return Index (net, AUD)

Fund Managers

Bradley Amoils

Managing Director/Portfolio Manager

Andrew Jacobson

CEO/Chief Investment Officer

Description

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.

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

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. 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.