https://pengana.com/wp-json/pen/performance?fund_code=PENGSC&date=31/12/2024&aggregation_code=Class%20A
CLOSE
BACK

OUR FUNDS

CLOSE

Global Small Companies Fund

Specialists in a vast and growing investable universe

December 2024 - Monthly REPORT

December Report

SUMMARY

  • The Fund returned +2.9% in December, while the benchmark delivered -0.2%.
  • Global equities moved lower in December, following the strong November rally and rising fears that persistent inflation may lead to higher-than-expected interest rates.
  • Smaller companies underperformed larger stocks in December, but strong stock performance at the smaller end of the market cap spectrum – where the Fund is overweight – ensured it outperformed.

PORTFOLIO

Top Holdings (alphabetically)

ExlService Holdings, Inc.
United States
Industrials
ExlService Holdings, Inc. is an operations management and analytics company, which engages in providing business process management. It operates through the following segments: Insurance, Healthcare, Travel, Transportation, and Logistics, Finance and Accounting, Analytic, and All Other. The Insurance segment serves property and casualty insurance, life insurance, disability insurance, annuity, and retirement services companies. The Healthcare segment offers services related to care management or population health, payment integrity, revenue optimization, and customer engagement. The Travel, Transportation, and Logistics segment includes business processes in corporate and leisure travel such as reservations, customer service, fulfillment, and finance and accounting. The Finance and Accounting segment is comprised of procure-to-pay, order-to-cash, hire-to-retire, record-to-report, regulatory reporting, financial planning and analysis, audit and assurance, treasury, and tax processes. The Analytics segment consists of driving improved business outcomes for customers by generating data-driven insights. The All-Other segment is involved in banking, financial, utilities, and consulting services. The company was founded by Vikram Talwar and Rohit Kapoor in April 1999 and is headquartered in New York, NY.
Hilan Ltd.
Israel
Industrials
Hilan Ltd. engages in the provision of Software as a Service (SaaS) for the purpose of managing the enterprise human capital. Its solutions include payroll, human resources, time and attendance, pension, analytics, and business process outsourcing (BPO). The firm offers its services to the industry, high-tech, finance, academic, communications, healthcare, municipal, transportation, retail, education, government, social care, associations, and hotels sectors. It operates through the following segments: Payroll Services, Human Resources, and Organizational Systems, Business Solutions, Computing Infrastructures, and Marketing of Software Products. The Payroll Services, Human Resources, and Organizational Systems segment provides payroll management services, pension operations, enterprise resource planning, other value-added services, and attendance, human resources, business, financial, and relationship management. The Business Solutions segment is involved in the sale of outsourcing and technological value-added solutions, as well as solutions and projects in the field of computing, digital, and innovation. The Computing Infrastructures segment sells solutions in the field of computing infrastructures, managed public and private clouds, advanced information security, and cyber. The Marketing of Software Products segment is composed of the distribution and assimilation of software products and solutions in the field of control, data, analytics and business intelligence, infrastructures and applications in the information technology world, document and content management, information and cyber security, and content delivery network. The company was founded on December 16, 1992 and is headquartered in Tel Aviv, Israel.
IntegraFin Holdings PLC
United Kingdom
Financials
IntegraFin Holdings PLC operates as a holding company. The Company, through its subsidiaries, provides an investment platform to UK financial advisers and their clients through proprietary technology, a range of tax wrappers, and a variety of assets. IntegraFin serves clients in the United Kingdom.
NICE Information Service Co., Ltd.
Korea, Republic Of
Industrials
NICE Information Service Co., Ltd. engages in the provision of credit information services. It operates through the following business divisions: Corporate information, Credit bureau, Asset management and Others. The Corporate information business division offers corporate information provision, consulting and technical consulting bureau services. The Credit bureau business division offers individual credit information provision and consulting services. The Asset management business division offers bond collection and credit survey services. The Others business division offers other services such as data analysis. The company was founded on February 28,1985 and is headquartered in Seoul, South Korea.
NSD Co., Ltd.
Japan
Information Technology
NSD Co., Ltd. engages in the provision of information technology services. It offers System Solution Service that includes system development, system service, and sales of packaged software and system products. The company was founded on April 8, 1969 and is headquartered in Tokyo, Japan.

Capitalisation Breakdown

Region Breakdown

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 31 Dec 2024 1
1 MTH 1 YEAR 2 YEARS P.A. 3 YEARS P.A. 5 YEARS P.A. SINCE INCEPTION P.A.
Global Small Companies Fund 2.9% 10.9% 9.3% 0.1% 4.8% 6.7%
MSCI All Country World SMID Cap Index unhedged in AUD -0.2% 19.8% 17.5% 6.4% 9.4% 9.2%

Swipe horizontally to see all columns

Performance Chart

NET PERFORMANCE SINCE INCEPTION2

COMMENTARY

Market Commentary

Global equity markets fell steeply in local currency terms during December. In the US, the S&P500 declined 2.4%, while the smaller cap Russel 2000 plummeted 8.3%. This reflected some profit taking in the wake of the strong November rally, which followed the decisive US presidential election. This had left some market valuations looking stretched, which weighed on investor sentiment. Market confidence was also impacted by fears that some of the incoming Trump administration’s policies could be inflationary, which could keep interest rates higher than had been previously expected.

However, the US economy remains resilient, expanding by 3.1% in the September quarter. Headline inflation edged up to 2.7%, while the core reading remained steady at 3.3%. This gave the Federal Reserve (Fed) confidence to reduce US interest rates by 0.25% to a range of 4.25% – 4.50% during December.

European equities also moved lower in December. The euro region continues to struggle with a steep slowdown in its manufacturing sector while restrictive monetary and fiscal policies weigh on demand for services. Sentiment was impacted by political turmoil in France and Germany, where Chancellor Olaf Scholz lost a confidence vote, triggering an early election. US President-elect Trump’s threats of imposing sanctions on European goods only added to the gloom.

The UK equity market also fell back in December. This followed disappointing economic data, rising inflation and concerns that the new government’s budget measures would dampen business investment and economic growth.

Japanese equities delivered a positive return in December upon improving market sentiment as corporate governance reforms improve the position of shareholders. Share buybacks have reached record levels in Japan, while M&A activity appears to be gathering pace.

Emerging markets showed some resilience following a challenging period. China’s economy was boosted by improving domestic demand following recent stimulus measures, although the outlook is clouded by the threat of steeper US tariffs. Brazil raised interest rates to 11.25% to address inflationary pressures. Meanwhile, Mexico’s economy surged in the quarter, although high interest rates and the risk of higher tariffs overshadowed the outlook.

Portfolio Highlights

The Fund returned +2.9% in Australian dollar terms during December, while the MSCI World SMID Cap Index returned -0.2%. The outperformance was driven by strong stock performance in industrials and consumer discretionary, while weaker stock performance in communications services detracted from relative returns. Performance was strong in the smaller cap (<US$5 billion) segment, with those under US$1 billion making particularly impressive gains.

The Fund’s most significant contributor to relative performance during December was its holding in UK-based travel agent On the Beach. It focusses on short and medium haul flight and hotel package holidays to Continental Europe. The stock outperformed after the company announced better than expected fourth quarter earnings, driven by robust growth in bookings and profitability. It reported a 15% increase in total transaction value (TTV) and an 84% jump in profit before tax. These were supported by record summer volumes and a strategic focus on premium holidays, which now represent 80% of total sales. The company’s capital-light business model and strong free cash generation enabled strong dividend payments and stock buybacks, which further boosted investor confidence.

Another strong performer was Latin America’s leading travel technology company Despegar.com, in which the Fund only established a position in early November. In December, the company’s board agreed on a takeover deal from global technology investor Naspers, which valued the company at US$1.7 billion or US$19 per share, a 33% premium on the previous day’s closing share price. Regardless of whether the deal closes, Despegar is well positioned to deliver sustainable earnings growth from its exposure to Latin America’s growing travel market.

The largest detractor from the Fund’s relative returns in December was its holding in UK-based Integrafin, which operates the investment platform Transact, which is widely used by UK financial advisers and clients. The company delivered strong full-year earnings results, but investors were concerned when it announced targeted fee reductions for pension wrap products and non-advised clients. It also announced a 9% increase in forecast administration expenses for 2025, partly related to the relocation of its London office. This led to lower consensus earnings forecasts, which appear excessive since the company raised its 2025 forecast.

The Fund established a new position in Grupo Aeroportuario del Centro Norte, which operates 13 airports in Mexico. This includes Monterrey International Airport which serves as its primary hub and accounts for 48% of its aeronautical income. The company has demonstrated strong operational efficiency, delivering a 60% EBITDA margin in 2024. Earnings should be further boosted by a planned 60% increase in capacity at Monterrey by the end of 2025. It will also focus on increasing non-aeronautical revenue streams, having grown revenue-per-passenger 23.6% year-on-year in the third quarter upon increased food, beverage and parking revenues. It also stands to benefit from the nearshoring trend in the northern Mexico regions close to the US border. Its strong market position, operational efficiency and multiple growth drivers make it an attractive investment.

PROFILE

Platform Availability

  • AMP North
  • Asgard eWrap
  • AET Wholesale Access Fund
  • BT Panorama
  • BT Wrap
  • Colonial First Wrap
  • Centric IDPS
  • Centric Super
  • Hub24
  • IOOF Pursuit
  • IOOF Portfolio Service
  • IOOF Core
  • Macquarie Wrap
  • Mason Stevens
  • MLC Navigator
  • MLC Wrap
  • Netwealth
  • Omniport(lifespan)
  • Powerwrap
  • Praemium
  • uXchange

STATISTICAL DATA

PORTFOLIO SUMMARY
VOLATILITY 3
12.8%
NUMBER OF STOCKS
37
BETA 4
0.9
MAXIMUM DRAW DOWN
-29.1%

FEATURES

  • APIR CODE PCL0022AU
  • REDEMPTION PRICEA$ 1.5993
  • FEES * Management Fee: 1.1%
    Performance Fee: 20.5%
  • Minimum initial investment A$10,000
  • FUM AT MONTH END A$ 77.83m
  • STRATEGY INCEPTION DATE 1 April 2015
  • BenchmarkMSCI All Country World SMID Cap Index unhedged in AUD

Fund Managers

Jon Moog

CIO and Portfolio Manager

Description

The Fund invests principally in small and midcap listed (or soon to be listed) global equities. Its investment objective is to obtain returns greater than the MSCI All Country World Index SMID Cap unhedged in Australian dollars (‘Index’) over rolling 3 year periods after fees. The Fund’s investment manager, Lizard Investors LLC, uses a value oriented investment approach that seeks to identify and invest in quality businesses that create significant value but are mispriced, overlooked, or out-of-favour. The investment manager believes that unique opportunities exist due to limited available research, corporate actions, or unfavourable investor perception.

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 1st April 2015.
3. Annualised standard deviation since inception.
4. Relative to MSCI All Country World SMID Cap index unhedged in AUD.
* For further information regarding fees please see the PDS available on our website.