A “golden era” for health care innovation

On May 10th, Pengana announced the appointment of Harding Loevner to manage the Portfolio. Established in 1989, Harding Loevner is a highly regarded global equity manager, responsible for the management of over US$84bn of investments on behalf of some of the world’s largest and most sophisticated investors (including pension funds, sovereign wealth funds, endowments, and family offices). In line with Harding Loevner’s investment strategy, PIA will hold investments in high-quality, growing companies identified through fundamental research with a long-term, global perspective.

In partnering with Harding Loevner, Pengana has identified a highly regarded investment manager with extensive global equity expertise that has generated significant outperformance throughout the strategy’s 32-year track record. We look forward to a long and fruitful relationship with our international equity investors.

Following Harding Loevner’s appointment, the process of transitioning the positions from the old to the new portfolio commenced.  This entire process was efficiently executed with minimal direct cost to PIA and was fully completed by month end. It is expected that the realisation of capital gains due to the transition will lead to increased franking credits, supporting the Company’s mandate of paying quarterly fully-franked dividends.

Please find a brief investment commentary for the month of May below, which will be expanded over the coming months now that Harding Loevner has full responsibility for portfolio management decisions. For investors wishing to know more about Harding Loevner’s investment philosophy and process, please see the recent introductory webinar recording HERE. 

Top Holdings (alphabetically)

Alphabet Inc United States Communication Services

Amazon United States Consumer Discretionary

CME Group United States Financials

Deere & Co United States Industrials

Facebook Inc United States Communication Services

First Republic Bank/CA United States Financials

Illumina United States Health Care

Microsoft United States Information Technology

PayPal United States Information Technology

SVB Financial Group United States Financials

Market 
As the pandemic eased and the recovery continued in most of the developed world, Energy and Financials led market returns. The prospect of higher interest rates helped banks continue their strong year-to-date run. Conversely, stocks lagged in Information Technology (IT) and Consumer Discretionary, where questions arose whether demand could keep rising at the pace witnessed at the height of the pandemic. A high concentration of Energy and Financials companies powered Canada higher. Europe fared well as COVID cases declined, pandemic restrictions relaxed, and vaccination efforts sped up after a sluggish start.

Portfolio  
We continue to see long-term growth opportunities within Health Care. The CEO of Illumina, the global leader in genetic sequencing tools, stated recently that we have entered a “golden era” for health care innovation due to advances in genomics and other areas of microbiology. We agree and believe that Illumina is well positioned to benefit from these advances as well as the industry’s renewed focus on investigating new gene-based therapies now that the pandemic is consuming less attention. As genetic sequencing technology improves and the cost falls, Illumina’s tools should have increasingly wider applications, from massive sequencing studies of large populations to clinical diagnostics and pre-natal testing.