1. The Responsible Entity will make an off-market buy-back offer each calendar quarter to buy-back up to 5% of the PCX issued capital each calendar quarter. The Responsible Entity will only be able to continue to buy-back 5% of the capital each calendar quarter where it would exceed the 10/12 Limit (10% of the smallest number of units that are on issue at any time during the previous 12 months) if the Responsible Entity has obtained approval by ordinary resolution of unitholders prior to effecting the buy-back. It is the Responsible Entity’s intention to seek unitholder approval when required so that it can continue to buy-back 5% of the issued capital each quarter. If the Responsible Entity receives acceptances for more units than 5% of the issued capital of PCX for any quarterly buy-back offer, the number of each acceptor’s units will be subject to a proportional scale-back.
2. The NAV is unaudited. The NAV is net of distributions paid since inception on 21 June 2024 to the date of this announcement.
3. Portfolio breakdowns show the Trust’s percentage ownership in the investments based on the latest available data provided by the underlying funds. Allocations adjusted to reflect investments that have been called but not settled. ‘Cash’ refers to the Trust’s direct and indirect investment exposure to cash and other liquid assets. The Master Classes’ investment exposures under ‘Fund Allocation’ exclude the investment exposure of the Trust to any ‘Cash’ that is held via these Master Classes. The Master Classes are explained in the latest PDS for the Trust.
The Responsible Entity intends to continue to make an off-market equal access buy-back offer to all investors in the Trust on a calendar quarterly basis for 5% of the issued capital of the Trust at the Buy-Back Price. The Buy-Back Price is equal to the sum of: (i) the NAV per unit as at the Buy-Back Pricing Date; and (ii) the amounts of distributions that the unitholder would have been entitled to if the unit was not cancelled from the Buy-Back Cancellation of Units Date up to the Buy-Back Payment Date. The Responsible Entity intends that each round of quarterly buy-back will have at least one calendar quarter between the date required for a Unitholder to elect to participate in the buy-back and its Buy-Back Pricing Date and Buy-Back Payment Date, with specific dates to be made available in future Buy-Back Booklets (subject to the acceptance of the buy-back timetable by the ASX). Please refer to the latest PDS for an explanation of capitalised defined terms and a detailed description of the mechanism.
*Lonsec ratings issued 06/11/2025 are published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Ratings are general advice only, and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and Lonsec assumes no obligation to update. Lonsec uses objective criteria and receives a fee from the Fund Manager. Visit lonsec.com.au for ratings information and to access the full report. © 2020 Lonsec. All rights reserved.
**SQM Research is an investment research firm that undertakes research on investment products exclusively for its wholesale clients, utilising a proprietary review and star rating system. Information contained in this document attributable to SQM Research must not be used to make an investment decision. The SQM Research rating is valid at the time the report was issued, however it may change at any time. While the information contained in the rating is believed to be reliable, its completeness and accuracy is not guaranteed. The SQM Research star rating system is of a general nature and does not take into account the particular circumstances or needs of any specific person. Only licensed financial advisers may use the SQM Research star rating system in determining whether an investment is appropriate to a person’s particular circumstances or needs. You should read the product disclosure statement and consult a licensed financial adviser before making an investment decision in relation to this investment product. SQM Research receives a fee from the Fund Manager for the research and rating of the managed investment scheme.
For all important information regarding BondAdviser Product Assessments please see the final page of the BondAdviser Fund Report or visit the BondAdviser website.
Pengana Investment Management Limited (ACN 063 081 612, AFSL 219462) (“Pengana”) is the issuer of this document and units in PCX (ARSN 673 024 489).
There are no guarantees that an active trading market with sufficient liquidity will develop or that such a secondary market will sustain a price representative of the NAV per unit. In circumstances where units are suspended from the ASX, unitholders may not be able to sell their units via the ASX until trading recommences.
The information provided in this document is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before making an investment decision in respect of PCX you should access whether PCX is appropriate give your objective, financial situation or needs. None of Pengana, Mercer Consulting (Australia) Pty Ltd, nor any of their related entities, directors, partners or officers guarantees the performance of, or the repayment of capital, or income invested in PCX. An investment in PCX is subject to investment risk including a possible loss of income and principal invested. Past performance is not a reliable indicator of future performance, the value of investments can go up and down.
Authorised by: Paula Ferrao, Company Secretary
COMMENTARY
Market Update: Insights from Our US Visit – PCX Well Positioned
This month’s commentary is anchored by the collective insights, concerns, and observations gathered during our recent visit to the United States. We engaged directly with our core managers, leverage providers, institutional allocators, and economists across the US corporate credit ecosystem.
The insights derived from our tour confirm the critical importance of selectivity and structural focus. They have led us to remain highly confident in the Global Private Credit (GPC) asset class and the current positioning of the PCX portfolio as the optimal mechanism for investors to capture the GPC value proposition.
1. Market Commentary – The View from the US Frontline
Our discussions reinforced the three pillars of our investment thesis for global private credit, confirming their central role in generating strong risk-adjusted returns:
2. Market Dynamics: The Problem of Structural Risk and Bifurcation
The consensus among the market participants we met paints a clear picture: achieving defensive private credit returns is increasingly problematic at the large end of the market due to pervasive risk and bifurcation.
Public Markets and the Deployment Pressure
Our discussions repeatedly highlighted the dilemma created by tight public credit spreads (Investment Grade and High Yield) and enormous capital inflows into the large-cap private credit segment. This situation exerts pressure on managers with large deployment targets, forcing them into transactions that are intensely competitive with the Broadly Syndicated Loan (BSL) and Leveraged Loan markets. For highly-rated borrowers, the market is overtly borrower-friendly. This dynamic requires managers to frequently compromise on pricing and protective covenants, effectively taking on uncompensated risk. This compromise in underwriting discipline is viewed by observers as a significant risk factor, a concern already evidenced by performance divergence within the listed Business Development Company (BDC) market (a BDC is a US closed-end vehicle that provides capital, primarily in the form of debt).
The Core Middle Market Solution
In stark contrast, the Core Middle Market, where PCX focuses its investments, is structurally insulated from this large-cap deployment pressure. The consensus is that managers with sufficient scale, long tenure, and proven differentiated origination are able to consistently exploit the market void created by the sustained retreat of commercial banks while also maintaining competitive advantage. This differentiation and scale allow these managers to maintain control over the lending process, resulting in superior pricing and the ability to secure robust downside protection through strong covenants. These managers are also reporting encouraging signs of underlying portfolio health, including growth in revenue and EBITDA. This disciplined, selective approach, unavailable at the large-cap end, is where investors can achieve the defensive returns expected from direct lending.
3. The Strategic Opportunity: Relative Value Through Selectivity
The market’s failure to efficiently price risk creates a secondary, high-conviction opportunity in Opportunistic Credit.
This consensus view confirms that opportunity arises from fundamentally sound businesses that are currently unloved or unable to secure liquidity due to market strains. These are companies struggling with specific issues, such as suboptimal balance sheet structures, idiosyncratic funding challenges, or limited liquidity, not poor underlying operational performance.
The insight gathered is that there is a distinct lack of competing capital for these specialised situations. For the best Credit Opportunities managers, this translates into an ability to selectively deploy capital at excellent risk-adjusted returns. By providing tailored financing solutions, these managers generate significant relative value compared to the core lending market. This allocation is crucial to capturing the high-return value created by prevailing market inefficiencies and structural dislocation.
4. PCX Positioning: Strategy Validated
The insights and concerns raised by the market participants we met, spanning everything from tight public market spreads to the risk inherent in large-cap deployment, have led to a high degree of comfort and confidence in the PCX strategy.
Our key takeaway is that the PCX structure is ideally positioned to mitigate the identified risks and capture the confirmed opportunities:
The insights derived from our tour confirm that the way we are positioned and the managers we have selected are the best way to capture the Global Private Credit opportunity. We are confident that PCX’s positioning will continue to deliver the GPC value proposition, focused on stable income and resilient returns.
Portfolio Update³
Strong diversification leads to stable returns.
The November cum-NAV per unit remained stable at $2.01. During the month, we received the majority of our underlying fund investor statements for Q3. The returns were positive and generally above target, with the balance of the Q3 investor statements expected to arrive in December. The Trust declared a 1.3c dividend for November, in excess of our target minimum and in line with the recent trend.
The funds from the recent capital raising have been fully deployed during November, with no dilutive impact on Trust returns.
At 30 November, the Trust has maintained its target allocation mix, with capital diversified across fund types and managers as follows:
Following deployment of the capital raising funds, the portfolio remains within stated limits across geography, seniority, and investment strategy. Diversification by vintage, style, and manager continues to underpin downside protection and liquidity planning.
Our underlying fund managers focus on providing credit to corporates operating within defensive, non-cyclical industries such as Financials, Industrials, Information Technology, and Health Care. These 4 sectors account for 69% of the total Trust exposure. Exposure to the Real Estate sector accounts for less than 3% of the total Trust exposure.