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High Conviction Equities Fund

A concentrated portfolio of ethically screened global companies

March 2021 - Monthly REPORT

Another strong month for healthcare stocks

SUMMARY

The Fund rose 4.6% in March. Positive contributions were bolstered by some of the Fund’s healthcare holdings.

PORTFOLIO

Top Holdings (alphabetically)

Lumentum United States Information Technology Novavax Inc United States Health Care Photocure Norway Health Care Telecom Italia SpA/Milano Italy Communication Services Telix Pharmaceuticals Ltd Australia Health Care

Sector Breakdown

Capitalisation Breakdown

Region Breakdown

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 31 Mar 20211
1 Month1 Year2 Years P.A.3 Years P.A.5 Years P.A.SINCE INCEPTION
Fund 4.6%59.1%22.2%19.4%18.8%33.4%
MSCI World Total Return Index, Net Dividends Reinvested, in A$ 5.0%23.8%13.5%13.1%13.6%11.8%
RBA Cash Rate + 3% 0.3%3.2%3.6%3.9%4.1%4.3%
1 Month1 Year2 Years P.A.3 Years P.A.5 Years P.A.SINCE INCEPTION
Fund
4.6%
59.1%
22.2%
19.4%
18.8%
33.4%
MSCI World Total Return Index, Net Dividends Reinvested, in A$
5.0%
23.8%
13.5%
13.1%
13.6%
11.8%
RBA Cash Rate + 3%
0.3%
3.2%
3.6%
3.9%
4.1%
4.3%

Performance Chart

NET PERFORMANCE SINCE INCEPTION2

COMMENTARY

The Fund rose 4.6% in March. Positive contributions were recorded by Norwegian bladder cancer diagnostic producer Photocure, which rose 23% after reporting its first quarter of results after buying back the European distribution rights for its main product, which boosted revenue despite COVID lockdowns reducing cancer procedures.

Australian radio-oncology company Telix rose 12% after reporting full-year results although there was little new information. We expect the approval of the company’s prostate cancer diagnostic by the FDA around midyear along with Phase 3 data from its kidney cancer imaging product, which has been given fast track approval by the FDA, to be the main drivers of value over coming months.

We added a new position to Telecom Italia, the incumbent fixed and mobile telecom provider in Italy, which rose 16% during the month. The company will be a significant beneficiary of the European Union’s stimulus package with includes vouchers to connect to broadband. Italy has the lowest broadband penetration in Europe and no cable TV network, which leaves substantial room for the company to grow.

US healthcare insurer Cigna rose 18% after holding an analyst day highlighting it expects 6-8% long-term annual revenue growth and 10-13% EPS growth. Despite this, the shares trade on just 12x PE in part due to regulatory concerns, which we feel are overblown.

Australian cancer biotech Immutep rose 19% after signing a collaboration agreement with Merck USA to conduct a Phase 2 trial in first-line head and neck cancer with its drug Eftilagimod (Efti) combined with Merck’s leading cancer immunotherapy drug Keytruda (pembrolizumab). In early April the FDA granted fast track status for the Efti in this indication, which means the results from this study alone could be used to approve the drug. Importantly Immutep still owns 100% of the economic rights for Efti, which makes the company a likely takeover target if clinical trials are successful over the next 12 months.

US discount retailer Dollar Tree rose 18% after reporting strong results.

On the negative side, US COVID vaccine producer Novavax fell 20%. The company has yet to sign a deal with the European Union, which many had expected, although existing deals with Australia, the UK, Canada, NZ, and the USA will be sufficient to deliver substantial profits. The company is also facing shortages of stoppers and other products but they still expect to reach 2bn doses of annual capacity by mid-year, which we feel positions the company very strongly to sign further deals.

Chinese stocks were weak over the month as the Chinese government tightened credit conditions in the country to control debt. This impacted our two Chinese holdings, game streaming provider Huya and auto advertising company Autohome, which fell 25% and 20% respectively.

PROFILE

Platform Availability

  • Hub24
  • Macquarie Wrap
  • Mason Stevens
  • Netwealth

STATISTICAL DATA

PORTFOLIO SUMMARY
VOLATILITY3
25.9%
NUMBER OF STOCKS
20
BETA4
0.59
MAXIMUM DRAW DOWN
-20.2%

FEATURES

  • APIR CODE HHA0020AU
  • REDEMPTION PRICEA$ 1.305
  • FEES * Management Fee: 1.80% p.a. (Class A) | 1.25% p.a. (Class B)
    Performance Fee: 15.38% (Class A) | 20% (Class B)
  • Minimum initial investment A$10,000
  • FUM AT MONTH END A$ 38.12m
  • STRATEGY INCEPTION DATE 11 December 2014
  • BenchmarkRBA Cash Rate + 3%

Fund Managers

James McDonald

Portfolio Manager

Jeremy Bendeich

Portfolio Manager

Description

The Pengana High Conviction Equities Fund (the Fund) invests globally in a concentrated portfolio of up to 20 stocks. The Fund can invest in both small and large cap stocks and is diversified across countries and sectors. We avoid investment in companies that are currently, in our opinion, unnecessarily harmful to people, animals or the environment.

EXPLORE OUR FUNDS

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Axiom International Fund
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Axiom International Fund (Hedged)
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Australian Equities Fund
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High Conviction Property Securities Fund
High Conviction Property Securities Fund
Global Small Companies Fund
Global Small Companies Fund
WHEB Sustainable Impact Fund
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Emerging Companies Fund
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High Conviction Equities Fund
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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
Pengana Diversified Private Credit Fund
Pengana Diversified Private Credit Fund

1. Net performance figures are shown are those of Class A Units, 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 11 December 2014.
3. Annualised standard deviation since inception.
4. Relative to MSCI World. Using daily returns.
* For further information regarding fees please see the PDS available on our website.