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Pengana International Equities Limited (ASX: PIA)

The largest International Ethical LIC on the ASX. Targeting fully franked dividends, paid quarterly.

April 2023 - Monthly REPORT

April Report

SHARE PRICE

NTA POST-TAX

NTA PRE-TAX

INVESTMENT PERFORMANCE1

DIVIDEND YIELD2

CONSECUTIVE DIVIDENDS PAID

1. Investment performance since new mandate adopted 1 July 2017.
2. Dividend yield is based on current displayed share price and dividends declared over the previous 12 months
3. Grossed up yield is based on current displayed share price, dividends declared over the previous 12 months and the tax rate and franking percentage applicable for the most recently declared dividend

SUMMARY

  • Global share markets strengthened in April as economic data remained resilient and company earnings exceeded investor expectations
  • Australian dollar weakness supported share market returns in AUD terms
  • The Portfolio returned 1.9% in April, while the benchmark returned 3.1%


SHAREHOLDER OPEN FORM – ASK US ANYTHING

In an effort to have greater engagement with our shareholders, as well as ensure our monthly commentary and investment updates cover the topics important to you, we have included an open text form in this month’s report that will allow you to submit any questions you may have for the investment team, Harding Loevner, in relation to the investment process, portfolio holdings, portfolio construction or performance. Please submit your questions HERE and we will provide a comprehensive response to all questions in next month’s report.

PORTFOLIO

Top Holdings (alphabetically)

Alphabet Inc
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.
AMETEK Inc
United States
Industrials
AMETEK, Inc. is a global manufacturer of electronic instruments and electromechanical devices. The Company manufactures advanced instruments for process, aerospace, power, and industrial markets and is a supplier of electrical interconnects, specialty metals, technical motors and systems, and floor care and specialty motors.
Bank Central Asia Tbk PT
Indonesia
Financials
PT Bank Central Asia Tbk provides banking and related services. The Bank also provides custodianship, trusteeship, and management of pension funds of financial institutions. Through its subsidiaries, the Bank also provides leasing and consumer financing services.
Deere & Co
United States
Industrials
Deere & Company manufactures and distributes a range of agricultural, construction, forestry, and commercial and consumer equipment. The Company supplies replacement parts for its own products and for those of other manufacturers. Deere also provides product and parts financing services. Deere and Company extends its services and products worldwide.
Meta Platforms Inc
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
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.
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.
Synopsys Inc
United States
Information Technology
Synopsys, Inc. supplies electronic design automation solutions to the global electronics market. The Company provides design technologies to creators of advanced integrated circuits, electronic systems, and systems on a chip. Synopsys also provides consulting services and support to its customers to streamline the overall design process and accelerate time to market.
UnitedHealth Group Inc
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 Inc
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.
See Portfolio Breakdown

Sector Breakdown

Capitalisation Breakdown

Region Breakdown

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 30 Apr 20231
1M 1Y 3Y Pengana SI
July 20171
(ASX: PIA) 1.9% 3.6% 4.3% 6.9%
Index2 3.1% 11% 12.8% 11.6%

Swipe horizontally to see all columns

COMMENTARY

Market Review 

Global equity markets made gains in April as investors turned their focus to more resilient economic data and better-than-expected quarterly earnings reports. The MSCI World Total Return Index AUD delivered 3.1% during the month. The uplift in share prices was led by large technology companies such as Meta Platforms (which owns Facebook, Instagram and WhatsApp) and Microsoft.

The energy sector outperformed the broader market following the announcement of cuts in crude oil production by members of the OPEC+ group. Meanwhile, consumer staples stocks outperformed upon evidence of their pricing power being sustained. Concerns that falling household income is impacting demand led automotive stocks to underperform, dragging down returns in the broader consumer discretionary sector.

Europe was the strongest performing economic region, while negative returns in most major Asian countries impacted emerging market returns. Disappointing factory activity levels in China offset the rise in consumer demand which followed the lifting of pandemic-era restrictions.

Portfolio Comment

OpenAI, which is backed by Microsoft, launched its artificial intelligence chat bot ChatGPT in late 2022. This sparked both excitement and trepidation about the impact which artificial intelligence (AI) may have on our lives and on the competitive positioning and growth prospects of companies. Leading microchip developers, such as NVIDIA, expect rising demand for their products to power ever more complex systems.

Microsoft has been keen to highlight that the race to develop AI applications is boosting demand for its Azure cloud computing infrastructure. The company hopes that the recently launched AI-powered enhancement to its Bing search engine can help it capture increasing market share from Google.

AI is also creating challenges. Adobe faces more competition in content creation from new AI-based text-to-image applications such as Dall-E and Stable Diffusion. Adobe has unveiled its own AI image generator, Adobe Firefly. It aims to differentiate itself from rivals by only using licensed content from its stock image portfolio to safeguard against potential copyright violations that plague other AI tools.

The Portfolio’s holdings in financials detracted from relative returns. Fixed income electronic marketplace Tradeweb reported lower-than-expected revenues despite rapid volume growth, as its business mix shifted to lower-fee, investment-grade bonds.

Stock performance in the US also detracted from relative returns. Agricultural equipment manufacturer John Deere underperformed on concerns that falling agriculture commodity prices would weaken demand for its products.

The Portfolio’s overweight exposure to the health care sector contributed to relative returns. The Danish biotechnology company Genmab outperformed as it announced it would be collaborating with Dutch peer argenx to develop new cancer and immunology drugs.

PROFILE

STATISTICAL DATA (Since Mandated)

PORTFOLIO SUMMARY
VOLATILITY3
11.3%
NUMBER OF STOCKS
62
BETA4
0.83

FEATURES

  • ASX CODE PIA
  • FEES Management Fee: 1.23% p.a.
    Performance Fee: 15.38% of any return greater than the Index***
  • INCEPTION DATE 19 March 2004
  • MANDATED 1 July 2017
  • BenchmarkMSCI World Total Return Index, Net Dividend Reinvested, in A$ ("Index")
  • NTA Post Tax ** A$ 1.176
    28/04/2023
  • NTA Pre Tax ** A$ 1.193
    28/04/2023
  • Price Close ** A$ 0.950
  • Shares On Issue ** 256.54m
  • Premium/Discount to pre-tax NTA ** -20.4%
  • DRP Yes

Portfolio Managers

Peter Baughan

Portfolio Manager

Jingyi Li

Portfolio Manager

Description

Pengana International Equities Limited (trading on the ASX as PIA) is the largest international ethical Listed Investment Company (“LIC”) on the ASX. PIA’s objective is to provide shareholders with capital growth as well as regular, reliable, and fully franked dividends.

The strategy aims to generate superior risk-adjusted returns, through investing in an actively managed portfolio of global companies that meet the investment team’s high-quality and durable growth criteria at reasonable prices. A robust ethical framework provides an added layer of risk mitigation.

These companies are identified through the conduct of fundamental research, with a long-term, global perspective, and must exhibit the following four key investment criteria: competitive advantages, quality management, financial strength, and sustainable growth potential.

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)
Alpha Israel Fund
Alpha Israel Fund
Pengana Diversified Private Credit Fund
Pengana Diversified Private Credit Fund

1. As at the last day of last month prior to publishing of this report. Performance figures refer to the movement in net assets per share, reversing out the impact of option exercises and payments of dividends, before tax paid or accrued on realised and unrealised gains. 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 date of PIA: 19 March 2004, new investment team with new mandate adopted: 1 July 2017. Pengana International Equities Limited has been managed under the new investment mandate by the Pengana investment team since 1 July 2017. The performance since mandated in the table above refers to the movement in net assets per share since the new mandate adopted on 1 July 2017.

3. Annualised Standard Deviation since mandated
4. Relative to MSCI World Total Return Index, Net Dividends Reinvested
**As at the last day of last month prior to publishing of this report. The figures are unaudited.
*** Index/MSCI World refers to the MSCI World Total Return Index, Net Dividends Reinvested, in A$.