For the month ending 31 December 2019, the Fund returned -1.1% compared to the MSCI World Net TR Index (AUD unhedged) which returned -0.9%, and for the 2019 Calendar year the Fund returned 24.8%.
We saw strong performance from our defensive themes including from Education and Health in December. At the same time, we saw weak performance from our Resource Efficiency and Water Management themes. Between the two, the Fund slightly underperformed its benchmark this month.
Grand Canyon Education, in our Education theme, was the Fund’s largest positive contributor. Grand Canyon helps universities and colleges with the non-academic aspects of providing education. This delivers better outcomes for the students. In Grand Canyon’s case, most of those students are from less advantaged backgrounds studying vocational subjects. There have been various concerns recently over the stock, including concerns over potential regulatory changes. As we explained in our commentary in October, we believe the stock price had overreacted. We were glad to see it correct somewhat in this month.
Within the Health theme, Varian continued it’s solid performance. This leading radiotherapy equipment manufacturer helps address the growing demand for cancer treatment. It has a global presence including in emerging markets. Its new treatment system has recently been installed in three additional clinics in Africa to provide further access to cancer treatment. The system is particularly designed to target emerging markets, thanks to its smaller footprint and easier operation.
Premier was also a strong performer within the Health theme. As a group purchasing organisation, Premier helps healthcare providers reduce their costs. It also provides consulting services to help hospitals develop industry best practices to improve efficiency. Its stock price jumped in December over speculation that it is a takeover candidate.
Resource Efficiency was the weakest theme in the month. Lennox was the major detractor. Lennox makes air conditioning systems and heat pumps with a particular focus on high efficiency products. Its stock price weakened after it announced its guidance for 2020, which was below market expectations. The company is facing some short-term issues but we believe it is still well positioned over the long term.
Our Water Management theme performed poorly in December due in part to China Water Affairs. China Water Affairs supplies tap water and provides wastewater treatment in China. The market appears to be concerned about the company’s ability to gain access to capital during the trade war between the US and China. There is also slowdown in long term growth potential as the company has reduced construction in its Environmental Protection segment.
Our investment review for 2019 and 2020 Look Ahead can be found HERE
||A.O. Smith||United States||Industrials|
||Agilent Technologies||United States||Health Care|
||Grand Canyon Education||United States||Consumer Discretionary|
||Roper Technologies||United States||Industrials|
||TE Connectivity||United States||Information Technology|
||Thermo Fisher Scientific||United States||Health Care|
||Varian Medical Systems||United States||Health Care|
|1 Month||1 Year||3 Years P.A.||5 Years P.A.||SINCE INCEPTION|
|Strategy (partial simulation2)||13.2%||10.5%||6.1%|
|VOLATILITY3||13.1%||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||High Conviction Property Securities Fund||Australian Equities Fund||International Ethical Fund|
|Global Small Companies Fund||WHEB Sustainable Impact Fund||Emerging Companies Fund||High Conviction Equities Fund|
|Pengana International Equities Limited (ASX: PIA)||International Fund - Ethical Opportunity||Private Equity Trust (ASX: PE1)||Alpha Israel Fund|
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.