For the month ending 30 April 2020, the Fund returned 4.7% compared to the MSCI World Net TR Index (AUD unhedged) which returned 3.7%.
After the crash in March, April saw a meaningful recovery in the global stock markets. While large parts of Europe and the US remained in lockdown in April, China began to reopen its economy. The signs of recovery in China gave hope to investors. It provided a glimpse of what it would look like when the western world reopens their economies.
Amid this sharp market rise, the Fund kept up and outperformed its benchmark MSCI World. Our Sustainable Transport theme was the best performer, followed by the Water Management theme. Our Environmental Services and Wellbeing performed poorly in the month.
The Sustainable Transport theme was lifted by a rally in the automotive industry. Stocks in this sector were hit hard early in the pandemic, and even after the April rally remain under pressure. There will clearly be a dramatic drop in global demand for cars in 2020. We look beyond that, keeping our positions in several companies that are well positioned to benefit from the shift to electric vehicles and advanced safety. These include Aptiv, Norma and Hella, which were the major positive contributors this month.
Our Water Management was another positive contributor. This was due to the strong performance of Advanced Drainage Systems. It is a leading player in the stormwater management industry. It provides innovative water management solutions to manage storm and wastewater efficiently and safely. It also keeps millions of pounds of plastic out of landfills each year by using recycled resin as its major raw material. The rising incidence of storm events have given this business real momentum in recent years. The markets reacted positively to its full-year results preannouncement.
Our Environmental Services theme was the worst detractor as a result of poor performance of Arcadis. Arcadis is an international consulting and engineering company, active in the fields of infrastructure, environment and buildings. Sustainability is a fundamental part of the projects and solutions it delivers for its clients. While the trading update for the first quarter of 2020 was solid, markets were worried that projects might get postponed in the near future due to the pandemic.
Our Wellbeing theme was another relative detractor to our performance. In a month of market growth, many defensive companies underperformed, including Orpea in our Wellbeing theme. Orpea is a leading global player in aged care, with an extensive network largely in continental Europe. Nevertheless, Orpea has avoided difficulty due to its high quality approach. It swiftly implemented new protocols and set up crisis units across all its countries in late February. So far, the fatality rate in the group’s nursing homes has been lower than last year when the flu epidemic was more severe. As the pandemic and its after-effects unfold, we are confident that Orpea will emerge in an even stronger position.
We are wary of the market strength in April, as the world faces huge economic uncertainty in the near term. But this experience has made us even more positive on sustainability over the long term. Some governments, especially those within the European Union, are considering sustainability investments as part of the plan to stimulate economic recovery. The pandemic has also focused minds on the importance of resilience, and sustainable business models. We think our strategy is well-aligned to a post-pandemic world.
||Ansys||United States||Information Technology|
||Danaher||United States||Health Care|
||MSA Safety||United States||Industrials|
||Steris||United States||Health Care|
||Thermo Fisher Scientific||United States||Health Care|
|1 Month||1 Year||3 Years P.A.||5 Years P.A.||SINCE INCEPTION P.A.2|
|Strategy (partial simulation2)||8.9%||7.4%||5.6%|
|VOLATILITY3||13.2%||NUMBER OF STOCKS||52|
Partner, Fund Manager
Partner, Head of Research
The Pengana WHEB Sustainable Impact Fund invests in companies with activities providing solutions to sustainability challenges. WHEB have identified critical environmental and social challenges facing the global population over coming decades including a growing and ageing population, increasing resource scarcity, urbanisation and globalisation. The Fund invests in companies providing solutions to these sustainability challenges via nine sustainable investment themes – five of these are environmental (cleaner energy, environmental services, resource efficiency, sustainable transport and water management) and four are social (education, health, safety and well-being). WHEB’s mission is ‘to advance sustainability and create prosperity through positive impact investments.’
|International Fund||Australian Equities Fund||International Fund - Ethical||Global Small Companies Fund|
|WHEB Sustainable Impact Fund||Emerging Companies Fund||High Conviction Equities Fund||Australian Equities Income Fund|
|Pengana International Equities Limited (ASX: PIA)||International Fund - Ethical Opportunity||Private Equity Trust (ASX: PE1)|
1. From August 2017, performance figures are those of the Pengana WHEB Sustainable Impact Fund’s class A units (net of fees and including reinvestment of distributions). The strategy’s AUD performance between January 2006 and July 2017 has been simulated by Pengana from the monthly net GBP returns of the Henderson Industries of the Future Fund (from 1 January 2006 to 31 December 2011) and the FP WHEB Sustainability Fund (from 30 April 2012 to 31 July 2017). This was done by: 1) converting the GBP denominated net returns to AUD using FactSet’s month-end FX rates (London 4PM); 2) adding back the relevant fund’s monthly ongoing charge figure; then 3) deducting the Pengana WHEB Sustainable Impact Fund’s management fee of 1.35% p.a. The WHEB Listed Equity strategy did not operate between 1 January 2012 and 29 April 2012 – during this period returns are zeroed. The Henderson Industries of the Future Fund’s and the FP WHEB Sustainability Fund’s GBP net track record data is historical. Past performance is not a reliable indicator of future performance. The value of the investment can go up or down.
2. The Fund incepted on 31 October 2007 as the Hunter Hall Global Deep Green Trust. The Fund was relaunched on 1 August 2017 as the Pengana WHEB Sustainable Impact Fund employing the WHEB Listed Equity strategy. This strategy was first employed on 1 January 2006 by the Henderson Industries of the Future Fund and currently by the FP WHEB Sustainability Fund.
3. Annualised standard deviation since inception.
4. Relative to MSCI World Total Return Index (net, AUD unhedged)
* For further information regarding fees please see the PDS available on our website.