Market Review
Global equity markets made gains in April as investors turned their focus to more resilient economic data and better-than-expected quarterly earnings reports. The MSCI World All Countries Total Return Index AUD delivered 2.8% during the month. The uplift in share prices was led by large technology companies such as Meta Platforms (which owns Facebook, Instagram and WhatsApp) and Microsoft.
The energy sector outperformed the broader market following the announcement of cuts in crude oil production by members of the OPEC+ group. Meanwhile, consumer staples stocks outperformed upon evidence of their pricing power being sustained. Concerns that falling household income is impacting demand led automotive stocks to underperform, dragging down returns in the broader consumer discretionary sector.
Europe was the strongest performing economic region, while negative returns in most major Asian countries impacted emerging market returns. Disappointing factory activity levels in China offset the rise in consumer demand which followed the lifting of pandemic-era restrictions.
Portfolio Comment
OpenAI, which is backed by Microsoft, launched its artificial intelligence chat bot ChatGPT in late 2022. This sparked both excitement and trepidation about the impact which artificial intelligence (AI) may have on our lives and on the competitive positioning and growth prospects of companies. Leading microchip developers, such as NVIDIA, expect rising demand for their products to power ever more complex systems.
Microsoft has been keen to highlight that the race to develop AI applications is boosting demand for its Azure cloud computing infrastructure. The company hopes that the recently launched AI-powered enhancement to its Bing search engine can help it capture increasing market share from Google.
AI is also creating challenges. Adobe faces more competition in content creation from new AI-based text-to-image applications such as Dall-E and Stable Diffusion. Adobe has unveiled its own AI image generator, Adobe Firefly. It aims to differentiate itself from rivals by only using licensed content from its stock image portfolio to safeguard against potential copyright violations that plague other AI tools.
The Fund’s holdings in financials detracted from relative returns. Fixed income electronic marketplace Tradeweb reported lower-than-expected revenues despite rapid volume growth, as its business mix shifted to lower-fee, investment-grade bonds.
Stock performance in the US also detracted from relative returns. Agricultural equipment manufacturer John Deere underperformed on concerns that falling agriculture commodity prices would weaken demand for its products.
The Fund’s overweight exposure to the health care sector contributed to relative returns. The Danish biotechnology company Genmab outperformed as it announced it would be collaborating with Dutch peer argenx to develop new cancer and immunology drugs.
Portfolio Manager
Portfolio Manager
Portfolio Manager
An International Fund targeting superior risk-adjusted returns through investing in high-quality and durable growing companies at reasonable prices.
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The Pengana Harding Loevner International Fund invests in high-quality, growing companies identified through fundamental research with a long-term, global perspective.
Pengana has appointed Harding Loevner to managed the Fund. Harding Loevner is a New Jersey-based global equity fund manager formed in 1989 with over US$86billion in Assets under Management.
Harding Loevner’ analysts search the world for companies that meet their high quality and durable growth criteria, conduct fundamental research, then value and rate their stocks to make them available to PMs for investment.
1. Harding Loevner was appointed fund manager as of 10 May 2021. June 2021 represents the first full month of Harding Loevner managing the Fund.
2. Class B Inception date 1 July 2015. Figures shown are calculated from the continuous performance of both the current and previous strategies. For performance see row labelled Fund (APIR PCL0026AU) in the table above which is the continuous performance of both the current and previous (shaded) strategies.
3. Harding Loevner Global Equity Strategy inception 1 Dec 1989
4. Prior to June 2021, the Harding Loevner Global Equity Strategy performance (labelled ‘Current Strategy (Partial Simulation)’ and shown in the shaded area) includes the strategy performance simulated by Pengana from the monthly gross returns of the Harding Loevner Global Equity strategy. This simulation was done by: 1) the conversion of US-denominated gross returns to AUD, 2) applying the fee structure of Class B. From June 2021 the strategy performance is the performance of the Pengana Harding Loevner International Fund Class B.
5. MSCI All Country World Total Return Index in AUD.
6. Performance for periods greater than 12 months are annualised. 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.
7. The Harding Loevner Global Equity Strategy performance (shown in the shaded area in the chart, and in the performance table as row labeled ‘Harding Loevner Global Equity Strategy) has been simulated by Pengana from the monthly gross returns of the Harding Loevner Global Equity strategy. This simulation was done by: 1) the conversion of US-denominated gross returns to AUD, 2) applying the fee structure of the stated class. Strategy Inception 30 November 1989.
8. Annualised standard deviation since inception.
9. Relative to MSCI All Country World Total Return Index in AUD
* For further information regarding fees please see the PDS available on our website.
