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Emerging Companies Fund

An Australian small caps fund with a 20+ year track record

December 2024 - Monthly REPORT

December Report

SUMMARY

The Fund fell 4.1% in December, underperforming both the Small Industrials and the Small Ordinaries by 1.1%. For the 12 months to December, the Fund was up a strong 17.5%, outperforming the Small Industrials and Small Ordinaires Indices by 5.4% and 9.2%, respectively.

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 31 Dec 2024 1
1 MTH 1 YEAR 3 YEARS P.A. 5 YEARS P.A. 10 YEARS P.A. 15 YEARS P.A. SINCE INCEPTION P.A.
Emerging Companies Fund -4.1% 17.5% 1% 8.6% 10.1% 10.8% 12.1%
S&P/ASX Small Ordinaries Index -3.1% 8.4% -1.6% 4% 7.3% 4.1% 4.8%
Outperformance -1.1% 9.2% 2.6% 4.6% 2.9% 6.7% 7.3%
ASX Small Cap Industrials Index** -3.1% 12.1% -0.8% 3.3% 6.8% 6.5% 5.4%
Outperformance -1.1% 5.4% 1.8% 5.3% 3.3% 4.2% 6.7%

Swipe horizontally to see all columns

COMMENTARY

Global markets were mixed over December as the combination of Donald Trump’s upcoming inauguration and a slowing China economy weighed on investor sentiment. That said, 2024 proved a high returning year for equity investors, for instance, in the US the S&P500 rose 23.3% and the tech heavy Nasdaq charged 28.6%.

If history is any guide, the expected lower interest rate environment over 2025 should be conducive to a period where small caps can outperform large caps. As is well documented, large caps have strongly outperformed small caps over the last three years, and so a reversion in prospects is likely at some point. Some of our higher conviction investments for 2025 are Generation Development Group, Propel Funerals and CAR Group.

Our positive contributors in December included:

Tuas (+14%) rose after announcing first quarter profit results at their AGM that exceeded market expectations. Infomedia (+12%) bounced on no news, following a couple of months of a drifting share price. Technology One (+4%) continued to rise as positive sentiment after their recent profit result continues to bring new buyers to the stock. Breville (+5%) rallied in response to positive sales announcements from global competitors in the lead up to Christmas. Praemium (+5%) saw renewed interest in the financial services platform provider following the company hosted “Investor Day”.

Our negative contributors in December included:

Zip Co (-13%) fell as some of the best performing companies of 2024 saw profit taking into the end of the year. Carsales.com (-13%) and HUB24 (-8%) retraced as many growth orientated companies fell in response to rising bond yields following Trump’s election win.  CharterHall (7%) fell as the interest rate sensitive property trust sector was very weak.

Performance Chart

NET PERFORMANCE SINCE INCEPTION2

PORTFOLIO

Top Holdings (alphabetically)

ALS Ltd.
Australia
Industrials
ALS Limited is a commercial services company with national and international operations. The Company's services include analytical and testing services, producing industrial and commercial chemical products, and hospitality, cleaning, and catering products.
AUB Group Limited
Australia
Financials
AUB Group Limited provides financial services. The Company offers equity-based risk management, insurance broking, and specialist underwriting agencies, as well as focuses on risk solutions for clients and strengthening our partners risk advisory capabilities.
CAR Group Limited
Australia
Communication Services
carsales.com Ltd owns and operates a portfolio of automotive and related industry websites, including an automotive classifieds website.
Charter Hall Group
Australia
Real Estate
Charter Hall Group invests in and develops real estate. The Company manages real estate investment funds and develops commercial, residential, and industrial properties.
Generation Development Group Limited
Australia
Financials
Generation Development Group Ltd. engages in the provision of development capital to financial sector businesses. It operates through the following segments: Benefits Funds Management and Funds Administration, Other Business, and Benefits Funds. The Benefits Funds Management and Funds Administration segment includes administration and management services to the benefits. The Other Business segment refers to the investment associates of the company. The Benefis Funds segment focuses on the operation of results and financial position of the benefits funds. The company was founded in 1991 by Martin Edward Ryan and is headquartered in Melbourne, Australia.
HUB24 Limited
Australia
Financials
HUB24 Ltd. engages in the provision of investment and superannuation portfolio administration and licensee services. It operates through the following segments: Platform, Licensee Services, Information Technology Services, and Corporate. The Platform segment develops and provides investment and superannuation platform services to financial advisers, stockbrokers and accountants, and its clients. The Licensee Services segment includes the provision of compliance, software, education, and business support to financial advisers. The Information Technology Services segment refers to the application and technology products for the financial services sector. The company was founded on April 13, 2007 and is headquartered in Sydney, Australia.
Netwealth Group Ltd.
Australia
Financials
Netwealth Group Ltd. operates as a financial services and technology company. It offers a range of innovative portfolio administration, superannuation, retirement, investment and managed accounts solutions to investors and intermediaries including Financial Intermediaries and private client. The company was founded by Michael Heine in 1999 and is headquartered in Melbourne, Australia.
Propel Funeral Partners Ltd.
Australia
Consumer Discretionary
Propel Funeral Partners Limited provides funeral services. The Company owns and operates funeral homes, cemeteries, crematoria, and related assets, as well as offers funeral, cremation, burial, and mortuary services. Propel Funeral Partners serves individuals and families in Australia and New Zealand.
SGH Limited
Australia
Industrials
SGH Ltd. is an investment company, which focuses on industrial services, media, and investments. It operates through the following business segments: WesTrac, Coates, Boral, Energy, Media Investments, and Other Investments. The WesTrac segment provides heavy equipment sales and support to customers. The Coates segment offers a range of general and specialist equipment to a variety of markets including engineering, building construction and maintenance, mining and resources, manufacturing, government, and events. The Boral segment is a construction materials group. The Media Investments segment relates to investments in listed and unlisted media organizations. The Other Investments segment covers other investments and incorporates listed investments and property. The company was founded in 1956 and is headquartered in Sydney, Australia.
Technology One Limited
Australia
Information Technology
Technology One Limited is an Australian-based company that is engaged in the development, marketing, sales, implementation, support, and distribution of financial management and enterprise software solutions. The Company has operations in New Zealand, the United Kingdom, the South Pacific, and Malaysia.

PROFILE

Platform Availability

  • AET Wholesale Access Fund
  • Asgard Element (Masterfund)
  • Asgard Infinity
  • BT Investment Wrap
  • BT Super Wrap
  • BT Panorama
  • Colonial First Wrap -Super/pension
  • Centric IDPS
  • Centric Super
  • Hub24
  • IOOF Portfolio Service
  • IOOF Core
  • IOOF Pursuit Select
  • IOOF Grow Wrap
  • Macquarie Wrap
  • MLC Wrap/Navigator
  • Mason Stevens
  • Netwealth
  • OneVue
  • Praemium
  • uXchange
  • Wealthtrac

FEATURES

  • APIR CODE PER0270AU
  • REDEMPTION PRICEA$ 2.5162
  • FEES * Management Fee: 1.3340%
    Performance Fee: 20.5% of the performance above the benchmark
  • FUM AT MONTH END A$ 836.06m
  • STRATEGY INCEPTION DATE 1 November 2004
  • BenchmarkS&P/ASX Small Ordinaries Accumulation Index

Fund Managers

Ed Prendergast

Senior Fund Manager

Steve Black

Senior Fund Manager

Description

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.

EXPLORE OUR FUNDS

Harding Loevner International Fund
Harding Loevner International Fund
Axiom International Fund
Axiom International Fund
Axiom International Fund (Hedged)
Axiom International 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)
Pengana Global Private Credit Trust (ASX:PCX)
Pengana Global Private Credit Trust (ASX:PCX)
Alpha Israel Fund
Alpha Israel Fund
Pengana Diversified Private Credit Fund
Pengana Diversified Private Credit Fund

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.