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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.

December 2024 - Monthly REPORT

December Report

SUMMARY

  • The Fund returned 3.8% in December, while the benchmark delivered 2.7%.
  • Global share markets declined in local currency terms upon persistent inflation concerns and rising geo-political uncertainty, following a strong rally in November.
  • A stronger US dollar and weaker Australian dollar ensured market and fund returns were positive in Australian dollar terms.

PORTFOLIO

Top Holdings (alphabetically)

Accenture Plc Class A
United States
Information Technology
Accenture PLC provides management and technology consulting services and solutions. The Company delivers a range of specialized capabilities and solutions to clients across all industries on a worldwide basis. Accenture operates a network of businesses provides consulting, technology, outsourcing, and alliances.
Alphabet Inc. Class A
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.com, Inc.
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.
Meta Platforms Inc Class A
United States
Communication Services
Meta Platforms, Inc. operates as a social technology company. The Company builds applications and technologies that help people connect, find communities, and grow businesses. Meta Platform is also involved in advertisements, augmented, and virtual reality.
Microsoft Corporation
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.
Netflix, Inc.
United States
Communication Services
Netflix, Inc. engages in providing entertainment services. It also offers activities for leisure time, entertainment video, video gaming, and other sources of entertainment. It operates through the United States and International geographic segments. The company was founded by Marc Randolph and Wilmot Reed Hastings on August 29, 1997 and is headquartered in Los Gatos, CA.
Salesforce, Inc.
United States
Information Technology
Salesforce, Inc. engages in the design and development of cloud-based enterprise software for customer relationship management. Its solutions include sales force automation, customer service and support, marketing automation, digital commerce, community management, collaboration, industry-specific solutions, and salesforce platform. The firm also provides guidance, support, training, and advisory services. The company was founded by Marc Russell Benioff and Parker Harris in 1999 and is headquartered in San Francisco, CA.
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.
UnitedHealth Group Incorporated
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 Incorporated
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 31 Dec 20246

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

Managed by Harding Loevner from June 2021
3.8% 25.1% 23.2% 4.4% 7.4% 10% 10.3%
Current Strategy (Partial Simulation)4

Harding Loevner Global Equity Strategy
10.4% 11.7% 9.6%
Index5 2.7% 29.4% 25.4% 11.2% 13.3% 12.9% 11.9% 7.7%

Swipe horizontally to see all columns

PERFORMANCE SINCE STRATEGY INCEPTION

NET PERFORMANCE SINCE INCEPTION7

COMMENTARY

Market Review 

Global equity markets declined in December in local currency terms after the strong rally in November which followed the decisive US presidential election. This decline reflected concerns that persistent inflation in the US and other major economies could slow the fall in interest rates. Investor confidence was also dented by rising political uncertainty after ruling coalitions in Germany and France lost confidence votes in their parliaments. This brings forward the general election in Germany and leaves France with a very fragile government. Meanwhile, moves by parliamentarians to impeach South Korean President Yoon Suk Yeol further impacted market sentiment.

US inflation was unchanged in November at 2.8%, which enabled the Federal Reserve (Fed) to cut interest rates by 0.25% to a range of 4.25% – 4.50% during December. However, Chairman Jerome Powell’s language after the meeting hinted at a potential pause in the current rate-cutting cycle, as inflation remains stubbornly above the Fed’s 2.0% target.

The European Central Bank also reduced its key lending rate by 0.25% to 3.00%, its fourth cut in 2024, as domestic inflation edged down. Meanwhile, the UK’s Bank of England and the Bank of Japan both kept their rates unchanged.

The strongest performing sectors in December were communications services, consumer discretionary and information technology, while materials, real estate and energy were the weakest.

Portfolio Commentary

The Fund returned 3.8% in December, while the benchmark delivered 2.7%. Strong stock performance in communications services and industrials and an overweight position in communications services drove relative returns. This was partially offset by weak stock selection and an overweight position in the underperforming healthcare sector.

The largest contributor to relative returns in December was the overweight position in US-based technology giant and Google-owner Alphabet. It outperformed after unveiling a new quantum computing chip, Willow, which solved in five minutes a computing problem that reportedly would take a standard computer more than a trillion years. Additionally, the company released the latest version of its AI digital assistant, Gemini 2.0, which is two times faster than Gemini 1.5.

The Fund’s holding in US-based semiconductor and infrastructure developer Broadcom also contributed to relative returns. It outperformed after announcing strong quarterly earnings results and forward guidance. Broadcom expects revenue from custom-made semiconductors supplied to the company’s three existing large data-centre customers to increase to US$60–90 billion in 2027, far exceeding investors’ expectations. Broadcom is a key partner to the hyperscalers—the largest data-centre operators—in building their customised application-specific integrated circuits (ASICs). Investors are only now appreciating Broadcom’s strong market position and consistent free cash flows, although it has been held in the Fund since early 2022.

The Fund’s largest detractor from relative returns in December was US-based bio-pharmaceutical manufacturer Vertex Pharmaceuticals, which develops drugs to treat Cystic Fibrosis. The stock underperformed after announcing that its nonadditive drug for lower back pain had failed to perform better than a placebo in a late-stage trial.

The Fund was a long-term investor in US-based semiconductor developer NVIDIA before exiting its position in February 2024 due to valuation concerns. A new position was established in the stock during December. It became clear that it will take longer for emerging competitors to sufficiently narrow the technological gap with NVIDIA’s GPU chips to the extent they pose a threat to its pricing power. This made the valuation level more attractive. The company has also been developing next-generation products that extend beyond chips, including its sophisticated server rack system and development software, CUDA.

The Fund exited its position in US-based biopharma equipment supplier Repligen upon concerns for its future earnings growth.

PROFILE

STATISTICAL DATA2

PORTFOLIO SUMMARY
VOLATILITY8
11%
NUMBER OF STOCKS
59
BETA9
0.9

FEATURES

  • APIR CODE PCL0026AU
  • REDEMPTION PRICEA$ 1.1561
  • FEES * Management Fee: 0.974%
    Performance Fee: Nil
  • Minimum initial investment $10,000
  • FUM AT MONTH END A$ 39.9m
  • 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

Rick Schmidt

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 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. 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.