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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 2.5% in January, holding up marginally better than the benchmark, which fell 2.7%, in a month of mixed global equity market performance and significant dispersion across sectors and regions.
- Emerging Markets were the strongest-performing region, supported by continued demand for AI-related semiconductor components and a weaker US dollar, while the US lagged despite reaching a record high during the month.
- Although weakness in software and services companies weighed on performance, strong results from select semiconductor and industrial technology holdings supported relative performance.
COMMENTARY
Market Commentary
Global equity markets were mixed in January, with performance driven largely by sector and regional leadership rather than a consistent global direction. Sentiment around artificial intelligence and commodity prices played an important role in shaping outcomes across markets.
Emerging Markets were the strongest-performing region during the month. Gains were led by South Korean semiconductor companies, as demand for artificial intelligence-related memory components continued to strengthen and pricing conditions improved. A softer US dollar provided an additional tailwind to returns across Emerging Markets.
In contrast, the US lagged the broader global market, despite the S&P 500 reaching a record high late in January. Information Technology weighed on US returns, particularly software and services companies, as investors reassessed how advances in artificial intelligence may alter traditional business models and competitive dynamics. The resulting weakness in software stocks dampened broader market performance.
Energy and Materials were the strongest-performing sectors, benefiting from rising energy and commodity prices. These areas outperformed as investors rotated toward companies exposed to improving commodity trends, contrasting with the softness seen in segments of the technology sector and contributing to variation in returns across markets.
Portfolio Commentary
January was characterised by sharp divergence within Information Technology and strong gains across select Emerging Markets, creating a mixed backdrop for the Portfolio. Weakness in software and services companies weighed on performance, although strength in selected semiconductor and industrial technology holdings provided some offset.
Software and services companies came under pressure as investors reassessed how advances in artificial intelligence (AI) may reshape established business models. The market reaction reflected concerns that new AI tools could alter competitive dynamics and affect pricing power across segments of the industry.
While AI represents an important technological shift, the investment approach remains focused on evaluating how these developments influence long-term competitive positioning rather than reacting to short-term sentiment. The Portfolio’s core software holdings, including Accenture, a global IT consulting and outsourcing provider, Adobe, a digital media and creative software company, Microsoft, the US software and cloud computing leader, and SAP, the German enterprise software provider, are businesses with strong competitive advantages, high switching costs and deep customer relationships. In the team’s view, these characteristics position them to incorporate AI in ways that reinforce long-term earnings power.
In Emerging Markets, the portfolio’s lack of exposure to two South Korean memory chip manufacturers, Samsung Electronics and SK Hynix, detracted from relative returns. Both companies benefited from strong AI-related demand and improved pricing conditions during the month. Within Consumer Discretionary, Sony declined amid concerns that higher memory costs could pressure margins in its PlayStation business. Booking Holdings, the global online travel platform, also weakened as investors debated the potential for AI-enabled tools to alter established booking dynamics.
Partially offsetting these headwinds, ASML, the Dutch manufacturer of advanced semiconductor lithography equipment, reported stronger than expected bookings and improved its medium-term outlook. Delta Electronics, a Taiwanese provider of power management and industrial automation solutions, benefited from continued investment in AI-related infrastructure. The Portfolio’s lack of exposure to Apple provided an additional relative benefit during the month.
There were no Portfolio changes in January. The Portfolio remains focused on high-quality global businesses with durable competitive advantages and resilient balance sheets, maintaining a disciplined long-term investment approach despite short-term market volatility.