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High Conviction Equities Fund

A concentrated portfolio of ethically screened global companies

December 2021 - Monthly REPORT

Telix receives FDA approval for its prostate cancer diagnostic

SUMMARY

The Fund rose 4.1% in December, compared to the index return of 1.7%.

PORTFOLIO

Top Holdings (alphabetically)

Ciena Corp
United States
Information Technology
F45 Training Holdings Inc
United States
Consumer Discretionary
Lamb Weston Holdings Inc
United States
Consumer Staples
Lumentum
United States
Information Technology
Telix Pharmaceuticals Ltd
Australia
Health Care

Sector Breakdown

Capitalisation Breakdown

Region Breakdown

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 31 Dec 20211
1 MTH 1 YEAR 2 YEARS P.A. 3 YEARS P.A. 5 YEARS P.A. SINCE INCEPTION P.A.
High Conviction Equities Fund Class A 4.1% 9.2% 13.7% 17.8% 15.0% 29.6%
MSCI World Total Return Index (net, AUD) 1.7% 29.3% 16.8% 20.4% 14.9% 13.6%
RBA Cash Rate plus 3% p.a. 0.3% 3.1% 3.2% 3.5% 3.9% 4.2%

 

Swipe horizontally to see all columns

Performance Chart

NET PERFORMANCE SINCE INCEPTION2

COMMENTARY

Australian radiotherapy producer Telix rose 17% after receiving its long-awaited approval from the US Federal Drug Administration for its prostate cancer diagnostic product Illucix. We expect further positive news from the company’s phase 3 study of TLX-250CDX, a renal cancer diagnostic in the next few months.

US optical networking company Ciena reported pleasing quarterly results pushing the shares up 25%. Data growth is driving demand for optical networks globally. In addition, the company is benefitting from many telecom operators replacing their Huawei equipment.

US-French Fry producer Lamb Weston rose 19% after reporting strong results. The company is benefitting from price hikes for its products to offset potato price increases caused by hot weather in the USA earlier in the year which pressured margins. We expect the company will benefit from a rebound in restaurant demand as the Omicron pandemic passes.

Optical component producer Lumentum rose 19% after its major customer Ciena reported strong results, as discussed above.

US real estate company Howard Hughes rose on the back of strengthening real estate prices in the US, particularly in its key states of Texas and Las Vegas.

Australian molecular diagnostic producer Genetic Signatures rose 36% as Covid testing volumes soared in NSW and Victoria, its largest markets.

On the negative side, US Covid vaccine producer Novavax somewhat surprisingly fell 33% after receiving approval from the European Union for its vaccine. We expect a strong year ahead for the company as there are still many unvaccinated people who are concerned about RNA and viral vector vaccines who have been waiting for protein-based vaccines. The market for booster doses will also be large in 2022 although it is unclear how long boosters will be required. Israel is now offering a fourth booster shot.

US utility-scale battery management software company STEM fell 13% along with many non-profitable businesses in December however we remain encouraged by the company’s acquisition of Also Energy which will allow it to extend its software offering to utility-scale solar operators and generally improve its scale.

Japanese car producer Subaru fell on little news. We expect strong sales and margins over the next two years as Semiconductor supply issues abate, and pricing stays firm. Their newly launched EV should also help them position for the transition away from the internal combustion powertrain.

PROFILE

STATISTICAL DATA

PORTFOLIO SUMMARY
VOLATILITY3
24.9%
NUMBER OF STOCKS
19
BETA4
0.59
MAXIMUM DRAW DOWN
-20.2%

FEATURES

  • APIR CODE HHA0020AU
  • REDEMPTION PRICEA$ 1.2018
  • 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$10,000
  • FUM AT MONTH END A$ 47.54m
  • 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.

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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. 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.