Pengana International Equities Limited (ASX: PIA)
Pengana International Equities Limited (ASX: PIA)
The reflation trade
In Nov-20 the Portfolio delivered 6.2%, which was a strong outcome while still trailing the Market which delivered 7.5%. The stocks generating the largest positive returns were Mowi, Cigna, and Biotelemetry.
The month’s trading was characterized as the reflation trade with the impetus being the strong results from various Covid vaccine trials and the belief that this will be the catalyst for economic growth in 2021. This resulted in a sharp and meaningful swing away from growth and to value stocks, with the former being a play on disruption-led growth and the latter on economic growth.
In Nov-20 the Portfolio delivered 6.2%, which was a strong outcome while still trailing the Market which delivered 7.5%. The stocks generating the largest positive returns were Mowi, Cigna, and Biotelemetry.
We do not have large exposure to the growth-at-any price stocks meaning our weaker stocks did not come from that part of the market. Rather, the largest detractors were Alibaba and Tencent, with their performance explained by mushrooming Chinese regulation of dominant tech platforms.
The Portfolio is meaningfully differentiated to the Benchmark with 26% of the Portfolio invested in Europe ex-UK vs the Benchmark’s 15% and 45% invested in North America vs the Benchmark’s 69%. Further, the Portfolio has fully exited the FAANG’s and has 8% invested in the IT sector vs the Benchmark’s 21%.
Finally, the portfolio is on a c5% FCF yield, 8% revenue CAGR and the companies in the fund have virtually no debt, all of which compare favourably to the broader market.
All portfolio holdings were compliant with the principles of the UN Global Compact and the portfolio had a “low ESG risk” rating, based on the aggregate weighted score of the portfolio’s holdings at month-end (source: Sustainalytics).
Portfolio Manager
Portfolio Manager
Pengana International Equities Limited (trading on the ASX as PIA) is the largest international ethical Listed Investment Company (“LIC”) on the ASX, that exists 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 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.
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. 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
**. As at the last day of last month prior to publishing of this report. The figures are unaudited.
***. MSCI World refers to the MSCI World Total Return Index, Net Dividends Reinvested, in A$.
