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NTA POST-TAX
NTA PRE-TAX
PORTFOLIO RETURN
(20 YEARS)
DIVIDEND YIELD1
CONSECUTIVE QUARTERLY DIVIDENDS PAID
1. Dividend yield is based on current displayed share price, and the most recently declared dividend, annualised
2. Grossed up yield is based on current displayed share price, the most recently declared dividend, annualised, and the tax rate and franking percentage applicable for the most recently declared dividend
SUMMARY
- PIA declined 1.5% in February, underperforming the MSCI World Total Return Index (Net Dividends Reinvested AUD), which fell 1.0%, as weakness in several technology-related holdings offset gains elsewhere in the portfolio.
- Global equity markets delivered mixed performance. Japan and Emerging Markets were the strongest-performing regions, supported by gains from South Korean memory chip manufacturers, while the US lagged amid ongoing concerns about the potential disruption of traditional software business models by artificial intelligence.
- Within the portfolio, positive contributions from Tradeweb and Chugai Pharmaceutical were offset by weakness in Tencent and Booking Holdings. The portfolio also initiated a new position in global life and health reinsurer Reinsurance Group of America.
COMMENTARY
Market Commentary
Global equity markets delivered mixed performance in February as investors continued to assess the economic implications of accelerating investment in artificial intelligence and the durability of global growth. While several international markets advanced during the month, weakness in the US weighed on broader benchmark returns.
Japan was the strongest-performing major market, supported by improving corporate fundamentals, ongoing governance reforms and sustained investor interest in Japanese equities. Emerging Markets also performed well, led by South Korea, where memory chip manufacturers extended their strong momentum amid continued demand for artificial intelligence infrastructure and data centre capacity.
In contrast, the US lagged behind global markets. Weakness was concentrated in software and services companies as investors grew increasingly concerned that rising capital expenditure associated with artificial intelligence development could pressure margins and weigh on near-term profitability. These concerns contributed to continued volatility across segments of the technology sector that had previously benefited from strong enthusiasm around AI-driven growth.
At the sector level, Materials performed strongly, supported by rising gold prices during the month. Communication Services lagged as investors reassessed the profitability outlook for companies, increasing their investment in artificial intelligence capabilities.
Portfolio Commentary
February presented a mixed backdrop for the portfolio. Weakness in several technology-related holdings weighed on performance, although strength in selected Financials and Health Care companies provided some offset.
In Emerging Markets, shares of Tencent, the Chinese internet and digital services platform, declined alongside other Chinese technology companies following speculation that authorities could increase value-added taxes on internet businesses.
Within Consumer Discretionary, Booking Holdings, the global online travel platform, also weakened as investors debated the potential for advances in artificial intelligence to alter how consumers search for and plan travel.
These headwinds were partially offset by positive contributions elsewhere in the portfolio. Tradeweb Markets, the US-based electronic trading platform for fixed income and derivatives, performed strongly after reporting solid fourth-quarter revenue growth and increased trading volumes across its platforms.
In Health Care, Chugai Pharmaceutical, the Japanese biotechnology company majority-owned by Roche, also delivered strong performance after reporting solid year-over-year growth in revenue and operating profit.
Toward the end of February, tensions in the Middle East escalated sharply. While geopolitical developments are difficult to predict, the investment approach focuses on assessing how such events may affect the long-term prospects of the businesses held in the portfolio rather than attempting to anticipate short-term market movements.
The portfolio has limited exposure to companies directly tied to defence or fossil fuel production, in part reflecting the ethical investment screens applied within the strategy. If global growth expectations were to weaken, some of the portfolio’s most highly valued companies linked to the artificial intelligence value chain could face pressure. Industrial and infrastructure-related companies may benefit over time from reconstruction activity.
During the month, the portfolio initiated a new position in Reinsurance Group of America, a global provider of life and health reinsurance. The company operates in a specialised segment of the insurance market that offers stable growth and higher barriers to entry than traditional property and casualty markets. With operations in more than 25 countries and strong underwriting capabilities, the company is well positioned to expand internationally.