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 10/11/2026 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 Context
October was again dominated by the interest rate outlook rather than by credit news. The Federal Reserve is expected to raise rates again before year-end after moving to 3.75–4.00% in September, and long-term US bond yields rose to around 5%, close to the highs last seen in 2008. Sticky inflation, heavy government borrowing and a surge in demand for capital from AI, defence, energy and industrial reshoring are all pushing rates up, so the cost of capital looks set to stay higher for longer.
Geopolitics adds volatility. Oil above US$100 is keeping inflation and rate risks elevated; equity markets have experienced sharp swings, and public credit has been trading more closely with equities than usual, particularly given the increasing concentration of companies reliant on AI-related spend. Beneath that, dispersion remains wide: higher-quality borrowers continue to finance at close to their tightest levels in years, while weaker, more exposed borrowers trade at stress-level spreads. The spread environment for private credit lending remains attractive, and rewards selectivity, so manager selection and oversight are critical.
Each region faces different pressures, which supports a diversified global approach
Private credit plays an important role in a diversified portfolio, particularly as a source of income, with return drivers that have a low correlation to traditional equity and fixed income markets. That thesis hasn’t changed.
United States. Growth and earnings have held up, but inflation is sticky, the Fed is still tightening, and housing and lower-income consumers are under pressure. Loan defaults remain low, but stress is building in loans written in 2021 and 2022 and in the largest deals, where competition has thinned margins and lender protections have weakened.
Europe. Growth is weaker, the European Central Bank has resumed raising rates, and heavy government borrowing has pushed long-term yields to their highest in more than a decade. Banks are tightening lending standards, and loans written in 2021 and 2022 are approaching refinancing, which should keep private lenders in demand.
Australia. At home, the cash rate is now 4.85%, house prices have been falling, and there are pockets of stress in construction. That puts pressure on real estate lending, which ASIC estimates is roughly half of a $200 billion private credit market: one economy and one sector.
It’s also why we invest the way we do. The US and European private credit markets are significantly larger, deeper and more mature, and private credit there is a core part of financing the real economy: manufacturers, healthcare providers, commercial services businesses, equipment, consumer staples, across industries with genuinely different drivers. That breadth is what allows a portfolio to be built with limited concentration and correlation, while keeping the flexibility to move capital towards attractive relative value opportunities.
For an inherently illiquid asset class, we continue to believe three things matter most:
Generating consistent returns in credit is less about perfection and more about resilience. That resilience is built through rigorous portfolio construction and broad diversification and is embedded before market conditions deteriorate
Higher rates, geopolitical shocks and rising correlation across public markets shouldn’t be ignored. They test whether a portfolio is as diversified as it looks, across economies, sectors, managers and the seniority and security of each loan. The investment case for private credit remains intact; what matters increasingly in periods of uncertainty is the way investors gain exposure to the asset class.
The opportunity set
Conditions for new lending remain strong in the parts of the market we focus on. Higher base rates have lifted income, spreads on new deals are wider than a year ago, and terms continue to move in lenders’ favour, with less leverage and larger equity cushions, particularly for established, cash-generative borrowers outside the most crowded large-cap deals.
While higher base rates lift income, they also raise borrowers’ interest burden, which is a driver of default risk. While default rates have risen moderately in 2026 according to Fitch and KBRA, they remain low, and we have experienced minimal stress in our portfolio to date. Given the high level of diversification within the portfolio, our mid-market focus, and our concentration in more recent vintage years, we expect to remain insulated from credit-related losses that may impact the sector. We are also looking to take advantage of the restructuring potential that such events represent, and have a number of managers that have capital in reserve to do so.
A significant refinancing cycle is emerging across the US and Europe, with a substantial volume of debt maturing in 2028 and 2029 that was originated on 2021-era valuations. This backdrop is expected to create an attractive pipeline of opportunities for lenders with available capital. Some of the capital that crowded into the market is now managing redemption requests rather than competing for deals, further improving the opportunity set for our solution-driven managers.
Portfolio Update
The October cum-distribution NAV per unit was marginally lower at $1.97, reflecting the timing of manager reporting rather than any underlying portfolio event. Reporting is typically lighter in the first month of each quarter, as most managers provide quarterly statements with a one to two month lag following quarter-end. The Trust declared a 1.3c distribution for October, exceeding the target minimum and in line with the recent distribution trend.
The table below summarises the key factors that can influence movements in the Fund’s NAV, outlines their potential impact on returns, and indicates whether any were material contributors to NAV performance during the month.
Portfolio Composition
At 31 October, the Trust maintained its target allocation mix, with capital diversified across fund types and managers as follows:
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.
The Trust’s underlying sector exposure remains well diversified and focused on defensive, non-cyclical industries such as Financials, Industrials, Information Technology and Health Care. These 4 sectors account for 65% of the total Trust exposure.