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Harding Loevner International Fund

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

November 2021 - Monthly REPORT

The e-Commerce landscape

SUMMARY

In November 2021, the Fund returned 3.3% compared to the MSCI ACWI (Total Return in AUD) which rose 3.4% for the same period. Financials stock selection helped due to the strong performance of Tradeweb, an electronic fixed income marketplace, which reported strong trading volume growth. Health Care performance was relatively weak. Despite reporting strong earnings, shares of genetic sequencing company Illumina fell as the EU ordered Illumina to not consolidate its recent acquisition of GRAIL, a provider of cancer-tracing blood tests. European stock-picking helped as Schneider Electric shares gained after management unveiled higher organic growth targets. Emerging markets stock selection detracted as Chinese property manager Country Garden Services fell on news it will raise capital for acquisitions.

PORTFOLIO

Top Holdings (alphabetically)

Adobe Inc
United States
Information Technology
Alphabet Inc
United States
Communication Services
Amazon
United States
Consumer Discretionary
Deere & Co
United States
Industrials
Facebook Inc
United States
Communication Services
First Republic Bank
United States
Financials
Microsoft
United States
Information Technology
Nike Inc
United States
Consumer Discretionary
SVB Financial Group
United States
Financials
Wuxi Biologics Cayman Inc
Hong Kong
Health Care

Sector Breakdown

Capitalisation Breakdown

Region Breakdown

PERFORMANCE

PERFORMANCE SINCE STRATEGY INCEPTION

NET PERFORMANCE FOR PERIODS ENDING 30 Nov 20216

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

Managed by Harding Loevner from June 2021
3.3% 14.7% 21.5% 19.7% 17.3% 13.5%
Current Strategy (Partial Simulation)4

Harding Loevner Global Equity Strategy
23.3% 21.6% 18.8% 15.6% 10.2%
Index5 3.4% 12.3% 23.9% 17.1% 14.9% 12.2% 7.4%

Swipe horizontally to see all columns

PERFORMANCE SINCE STRATEGY INCEPTION

NET PERFORMANCE SINCE INCEPTION7

COMMENTARY

Market Review

Markets declined with worries over inflationary pressures and fears that the economic recovery will be curtailed by the emergence of the Omicron COVID-19 variant as governments around the world abruptly restricted travel from specific regions. Energy stocks declined the most as oil prices plummeted in anticipation of reduced demand. Information Technology was the only sector to report gains. Chip designer NVIDIA reported strong demand from data center customers who use the company’s products for artificial intelligence applications. Management also announced a new metaverse platform, building investor enthusiasm for virtual world initiatives after Facebook recently announced its own plans.

Portfolio Comment

Rivalry in the Chinese internet retail industry is intensifying. Sales growth has slowed after surging during the pandemic and the government has instituted antitrust measures aimed to promote more competition. As a result, we sold Alibaba. In addition to threats from traditional online retailers, newer rivals have entered the eCommerce fray, such as companies specializing in short-video content, Kuaishou and Bytedance. Antitrust measures free merchants to leave Alibaba’s platform without retribution, forcing Alibaba to make concessions (and sacrifice margins) to entice them to stay. The competitive landscape in US eCommerce stands in contrast to China. Amazon’s recent margin pressure is mainly due to wage and commodity inflation, not competition. Meanwhile, US antitrust regulatory threats have remained relatively benign.

Year-to-Date Attribution

Industrials stock selection helped as shares of Swiss-based VAT Group rose on strong demand for its vacuum valves that are used in semiconductor manufacturing. Energy stock picking was weak as rising feedstock prices squeezed the margins of Neste, a producer of renewable biofuel.
Stock selection in the US has been very strong. First Republic Bank’s long-held focus on relationship banking has enabled it to grow deposits and loans without sacrificing credit quality. EM stock picking hurt relative performance. Economic and political uncertainty weighed on the Brazilian market, particularly the shares of Brazilian stock exchange business B3.

PROFILE

STATISTICAL DATA2

PORTFOLIO SUMMARY
VOLATILITY8
9.4%
NUMBER OF STOCKS
73
BETA9
0.77

FEATURES

  • APIR CODE PCL0026AU
  • REDEMPTION PRICEA$ 1.033
  • FEES * Management Fee: 0.974%
    Performance Fee: Nil
  • Minimum initial investment $10,000
  • FUM AT MONTH END A$ 71.63m
  • 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.

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Global Small Companies Fund
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WHEB Sustainable Impact Fund
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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.