CLOSE
BACK

OUR FUNDS

CLOSE

Harding Loevner International Fund

An International Fund targeting superior risk-adjusted returns through investing in high-quality and durable growing companies at reasonable prices.

June 2022 - Monthly REPORT

UPCOMING EVENT

Monthly Report - June

SUMMARY

  1. Global markets fell in June as inflation reached a 40-year high in both the US and Europe.
  2. Amid strong style headwinds and economic uncertainty, we continue to find opportunities to purchase high-quality, growing businesses.
  3. The Portfolio’s overweight in Health Care was a contributor to relative returns as Health Care stocks significantly outperformed the broad index.

 

The Fund fell -4.0% in June, outperforming the Index (MSCI All Country World Total Return Index (net) in $A) which fell -4.5% for the same period.

PORTFOLIO

Top Holdings (alphabetically)

Alphabet Inc
United States
Communication Services
Alphabet Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.
Amazon
United States
Consumer Discretionary
Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company products include books, music, computers, electronics and numerous other products. Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers. Amazon also operates a cloud platform offering services globally.
Deere & Co
United States
Industrials
Deere & Company manufactures and distributes a range of agricultural, construction, forestry, and commercial and consumer equipment. The Company supplies replacement parts for its own products and for those of other manufacturers. Deere also provides product and parts financing services. Deere and Company extends its services and products worldwide.
First Republic Bank
United States
Financials
First Republic Bank and its subsidiaries provide private banking, private business banking and private wealth management in urban, coastal markets in the U.S. First Republic delivers relationship-based service by providing a single point of contact for all of its services.
L'Oreal SA
France
Consumer Staples
L'Oreal manufactures cosmetics. The Company offers mascara, lip gloss, foundation, eyeshadow, primer, nail polish, lipstick, face powder, blusher, and concealer, as well as skin, hair, and body care products. L'Oreal serves customers worldwide.
Microsoft
United States
Information Technology
Microsoft Corporation develops, manufactures, licenses, sells, and supports software products. The Company offers operating system software, server application software, business and consumer applications software, software development tools, and Internet and intranet software. Microsoft also develops video game consoles and digital music entertainment devices.
Schneider Electric SE
France
Industrials
Schneider Electric SE manufactures electrical power products. The Company offers car chargers, home security goods, light switches, access control, sensors, valves, circuit breakers, cables, accessories, signaling devices, fuse, motor starters, and voltage transformers. Schneider Electric serves customers worldwide.
SVB Financial Group
United States
Financials
SVB Financial Group is the holding company for Silicon Valley Bank. The Bank is a commercial bank that serves emerging growth and middle-market growth companies in targeted niches, focusing on the technology and life sciences industries. Silicon Valley operates offices throughout the Silicon Valley and other areas of California, as well as in other states.
UnitedHealth Group Inc
United States
Health Care
UnitedHealth Group Incorporated owns and manages organized health systems. The Company provides employers products and resources to plan and administer employee benefit programs. UnitedHealth serves customers in the United States.
Vertex Pharmaceuticals Inc
United States
Health Care
Vertex Pharmaceuticals Incorporated discovers, develops, and commercializes pharmaceutical products. The Company develops drugs for the treatment of cystic fibrosis, cancer, inflammatory bowel, autoimmune disease, and neurological disorders. Vertex Pharmaceuticals serves healthcare sector worldwide.

Sector Breakdown

Capitalisation Breakdown

Region Breakdown

PERFORMANCE

PERFORMANCE SINCE STRATEGY INCEPTION

NET PERFORMANCE FOR PERIODS ENDING 30 Jun 20226

Pengana Harding Loevner International Fund Class B

The Class was established in 1 July 2015. From June 2021 Harding Loevner was appointed as the investment manager for the Fund.

1M 1Y
Since
Harding Loevner
Appointed June 20211
3Y 5Y
Since Fund
Inception
July 20152
Since Strategy
Inception
November 19893
Fund (APIR PCL0026AU)1,2

Managed by Harding Loevner from June 2021
-4.0% -22.7% -16.0% 4.0% 6.7% 7.2%
Current Strategy (Partial Simulation)4

Harding Loevner Global Equity Strategy
4.8% 8.4% 9.1% 8.9%
Index5 -4.5% -8.0% -3.6% 6.9% 9.4% 8.7% 6.7%

Swipe horizontally to see all columns

PERFORMANCE SINCE STRATEGY INCEPTION

NET PERFORMANCE SINCE INCEPTION7

COMMENTARY

Market Review

Global markets fell in June as inflation reached a 40-year high in both the US and Europe. In response, policymakers outlined aggressive rate hikes, putting further pressure on equities. In the US, the Federal Reserve raised rates by 75 basis points—the largest increase in nearly 30 years—and signalled further rate increases of a similar magnitude. Similarly, the European Central Bank signalled that it would deliver its first rate hike since 2011 in July.

Energy prices continued to be the largest driver of inflation in Europe as Russia took further steps to further choke off supply; the Nordsteam pipeline is now operating at 40% capacity due to a “gas turbine issue”. Further exacerbating the situation, a prolonged outage at the Freeport LNG plant in Texas has significantly reduced the US supply of liquified natural gas to the continent. Elsewhere, China was the only positive market this month as the country began to emerge from its COVID-induced lockdowns and central bank officials cut interest rates and injected a fresh round of stimulus into the economy.

Portfolio Comments

Amid strong style headwinds and economic uncertainty, we continue to find opportunities to purchase high-quality, growing businesses. Kering is a French luxury good conglomerate that is in the process of diversifying away from an outsized reliance on the Gucci brand. Management has historically delivered an impressive track record of innovation and growth, resulting in a company that is profitable, generates a high free cash flow, and is rapidly moving toward a net cash balance sheet. Poor sentiment due to weak consumer demand in China (one of Kering’s largest markets) has been an overhang on the stock for much of 2022; however, this provided us with an opportunity to purchase shares at an attractive valuation.

June Attribution

  • In Health Care, shares of Chinese biologics service provider WuXi Biologics soared as US export authorities were allowed to inspect one of the company’s Chinese facilities, raising prospects that WuXi may soon be removed from the US trade blacklist.
  • The Portfolio’s overweight in Health Care was a contributor to relative returns. Health Care stocks significantly outperformed the broad index despite posting negative returns for the month.
  • In Industrials, shares of US agricultural equipment manufacturer John Deere underperformed as farmers faced weakening economics (due to higher input costs like fertilizer) and higher financing costs for large farm equipment (due to rising interest rates).

 

High-quality, fast-growing companies, have significantly underperformed year-to-date. The severity of these style headwinds has contributed to Portfolio underperformance across all major sectors and regions. In our view however, the Global Equity Portfolio is loaded with high-quality global growth companies trading at increasingly attractive valuations. On balance, our companies continue to report strong results and, without exception, continue to invest through uncertain times from positions of financial strength. For the most part, the weakness in stock prices is a function of transient or cyclical pressures affecting short-term results and not a result of cracks in their fundamentals.

PROFILE

STATISTICAL DATA2

PORTFOLIO SUMMARY
VOLATILITY8
10.7%
NUMBER OF STOCKS
67
BETA9
0.84

FEATURES

  • APIR CODE PCL0026AU
  • REDEMPTION PRICEA$ 0.7471
  • FEES * Management Fee: 0.974%
    Performance Fee: Nil
  • Minimum initial investment $10,000
  • FUM AT MONTH END A$ 44.68m
  • STRATEGY INCEPTION DATE 1 December 1989
  • BenchmarkMSCI All Country World Total Return Index (net) in $A

Fund Managers

Peter Baughan

Portfolio Manager

Jingyi Li

Portfolio Manager

Description

An International Fund targeting superior risk-adjusted returns through investing in high-quality and durable growing companies at reasonable prices.

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.

EXPLORE OUR FUNDS

Harding Loevner International Fund
Harding Loevner International Fund
Axiom International Ethical Fund
Axiom International Ethical Fund
Axiom International Ethical Fund (Hedged)
Axiom International Ethical 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)
Alpha Israel Fund
Alpha Israel Fund

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. 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.