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.
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 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.