The Fund was up 5.5% in January, outperforming the Small Industrials by 2.3% and outperforming the Small Ordinaries by 0.9%. For the 12 months to January, the Fund was up 21.1%, outperforming the Small Industrials Index by 7.5% and outperforming the Small Ordinaries Index by 8.8%.
Senior Fund Manager
Senior Fund Manager
The Pengana Emerging Companies Fund combines the skills of highly experienced small company investors (collectively over 45 years’ experience) with a limited fund size and an objective of providing above market returns over the medium term. Our benchmark is the S&P/ASX Small Ordinaries Accumulation Index. The fund managers Steve Black and Ed Prendergast are part owners of the business and investors in the Fund, providing a strong incentive to perform. The Fund has strong research ratings from all major research houses and over the period since its inception has delivered returns well above benchmark.
1. 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.
2. Inception 1 November 2004.
* For further information regarding fees please see the PDS available on our website.
** The Fund does not invest in resource stocks.
COMMENTARY
Markets in January were reasonably firm, with the US index up 2.7%, the UK 6.1% higher and Australia up 4.6%. The US market has embraced the new president with reasonable confidence, with the enthusiasm enhanced by economic data showing manageable inflation and a resilient economy. Commodity prices were firm over January, with gold up 7%, copper 6% and oil up 3%. Notwithstanding this, the A$ held its lower levels after tanking 10.5% in the December quarter, primarily due to overall strength in the USD.
Domestically, a favourable inflation report has renewed expectations of an RBA rate cut in the shorter term. While this confidence may be well founded, the RBA is still balancing the upcoming effects of government subsidies and a tight labour market which may see inflationary pressures return.
Our key positive contributors in January were:
Generation Development (+27%) continued its rally following another strong quarter of flows into the investment bond and advisory operations. CAR Group (+13) bounced after a sharp fall in December without any obvious catalyst. HUB 24 (+16%), Praemium (+21%) and Netwealth (+10%) benefited from investment platform flows, which all surprised on the upside, and also signs that pricing power was swinging back in the favour of the platforms following a tighter pricing environment in recent years.
Our key negative contributors in January were:
ZIP Co (-18%) revealed its Q3 report, growing revenues at 21%, and posting lower bad debts, however clearly some shorter term investors had hoped for more. Infomedia (-10%) fell back after an 11% rally in December, again in the absence of any obvious catalyst. Jumbo Interactive (-5%), Mainfreight (-2%), and Technology One (-1%) were also marginally weaker without any firm catalysts.