The Fund rose 8.5% in August, outperforming the Small Industrials by 2.4% and outperforming the Small Ordinaries by 3.5%. For the 12 months to August, the Fund was up 49.1%, outperforming the Small Industrials Index by 21.3% and outperforming the Small Ordinaries Index by 19.6%. We were busy with reporting season in August, and are pleased that our largest positions showed very strong results.
View full commentary here.
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
Global markets were strong again in August, with the US market up 3% and most global markets rising. Bond yields fell during the month, aiding equity markets. The Fed’s commentary at the Jackson Hole meeting indicated that the process of QE tapering may begin soon, which will have implications should it eventuate given how critical this boosted liquidity has been for markets over the past 18 months. The Australian market rose 2.5% driven by a supportive results season, with tech stocks especially strong following the takeover of Afterpay, and a dramatic bounce in Wisetech, which achieved its growth forecasts. Mining and energy stocks were the only weak spots in the local market with iron ore prices falling 25% on concerns of slower demand from China.
Our best performers in August included:
Uniti (+24%) posted 50% EPS growth and revealed it was growing ahead of original expectations. MA Financial (Moelis) rose 46%, while Pinnacle Investments rose 32% after announcing faster growth in funds under management than originally expected. Mainfreight (+16%) posted first quarter profit growth of 83% as the shortage of global shipping capacity favoured its air and freight operations. Aussie Broadband (+40%) beat its prospectus forecasts and remains well positioned to take market share through its superior service model.
Our worst performers in August included:
Integral Diagnostics (-13% ) posted a reasonable result, however it foreshadowed higher than expected capital expenditure, which mildly spooked the marginal investor. Freelancer (-18%) is a very small investment for us, and suffered following lower than expected growth in their core business. Adore Beauty (-7%) waned after releasing a strong result which included forecasts of increased investment in marketing, which may impede margin growth in the near term. Seven Group (-9%) posted a solid result and outlook, where an upgrade was perhaps expected. NZX (-3%) drifted lower notwithstanding a robust profit outcome.