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Pengana International Equities Limited (ASX: PIA)

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

November 2021 - Monthly REPORT

The e-Commerce landscape

SUMMARY

In November 2021, the portfolio returned 3.4% compared to the MSCI World Index (Total Return in AUD) which rose 3.6% for the same period.  Financials stock selection helped due to the strong performance of Tradeweb, an electronic fixed income marketplace, which reported strong trading volume growth. Health Care performance was relatively weak. Despite reporting strong earnings, shares of genetic sequencing company Illumina fell as the EU ordered Illumina to not consolidate its recent acquisition of GRAIL, a provider of cancer-tracing blood tests. European stock-picking helped as Schneider Electric shares gained after management unveiled higher organic growth targets. Emerging Markets stock selection detracted as Chinese property manager Country Garden Services fell on news it will raise capital for acquisitions.

PORTFOLIO

Top Holdings (alphabetically)

Adobe Inc
United States
Information Technology
Alphabet Inc
United States
Communication Services
Amazon
United States
Consumer Discretionary
Deere & Co
United States
Industrials
Facebook Inc
United States
Communication Services
First Republic Bank
United States
Financials
Microsoft
United States
Information Technology
Nike Inc
United States
Consumer Discretionary
SVB Financial Group
United States
Financials
Wuxi Biologics Cayman Inc
China
Health Care

Sector Breakdown

Capitalisation Breakdown

Region Breakdown

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 30 Nov 20211
1M 1Y 3Y Pengana SI
July 20171
(ASX: PIA) 3.4% 22% 18.5% 14.7%
Index2 3.6% 26.6% 18% 15.5%

Swipe horizontally to see all columns

Performance Chart

NET PERFORMANCE SINCE MANDATED

COMMENTARY

Market Review

Markets declined with worries over inflationary pressures and fears that the economic recovery will be curtailed by the emergence of the Omicron COVID-19 variant as governments around the world abruptly restricted travel from specific regions. Energy stocks declined the most as oil prices plummeted in anticipation of reduced demand. Information Technology was the only sector to report gains. Chip designer NVIDIA reported strong demand from data center customers who use the company’s products for artificial intelligence applications. Management also announced a new metaverse platform, building investor enthusiasm for virtual world initiatives after Facebook recently announced its own plans.

Portfolio Comment

Rivalry in the Chinese internet retail industry is intensifying. Sales growth has slowed after surging during the pandemic and the government has instituted antitrust measures aimed to promote more competition. As a result, we sold Alibaba. In addition to threats from traditional online retailers, newer rivals have entered the eCommerce fray, such as companies specializing in short-video content, Kuaishou and Bytedance. Antitrust measures free merchants to leave Alibaba’s platform without retribution, forcing Alibaba to make concessions (and sacrifice margins) to entice them to stay. The competitive landscape in US eCommerce stands in contrast to China. Amazon’s recent margin pressure is mainly due to wage and commodity inflation, not competition. Meanwhile, US antitrust regulatory threats have remained relatively benign.

Year-to-Date Attribution

Industrials stock selection helped as shares of Swiss-based VAT Group rose on strong demand for its vacuum valves that are used in semiconductor manufacturing.  Energy stock picking was weak as rising feedstock prices squeezed the margins of Neste, a producer of renewable biofuel.
Stock selection in the US has been very strong. First Republic Bank’s long-held focus on relationship banking has enabled it to grow deposits and loans without sacrificing credit quality.  EM stock picking hurt relative performance. Economic and political uncertainty weighed on the Brazilian market, particularly the shares of Brazilian stock exchange business B3.

PROFILE

STATISTICAL DATA (Since Mandated)

PORTFOLIO SUMMARY
VOLATILITY3
8.7%
NUMBER OF STOCKS
72
BETA4
0.69

FEATURES

  • ASX CODE PIA
  • FEES Management Fee: 1.23% p.a.
    Performance Fee: 15.38% of any return greater than the MSCI World***
  • INCEPTION DATE 19 March 2004
  • MANDATED 1 July 2017
  • BenchmarkMSCI World Total Return Index, Net Dividend Reinvested, in A$
  • NTA Post Tax ** A$ 1.465
  • NTA Pre Tax ** A$ 1.538
  • Price Close ** A$ 1.420
  • Shares On Issue ** 255.28m
  • Premium/Discount to pre-tax NTA ** -7.7%
  • 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, 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.

EXPLORE OUR FUNDS

Harding Loevner International Fund
Harding Loevner International Fund
Axiom International Ethical Fund
Axiom International Ethical Fund
Axiom International Ethical Fund (Hedged)
Axiom International Ethical 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

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