Pengana International aims to obtain returns greater than the MSCI All Country World Total Return Index (net, AUD) (‘Index’) and with lower volatility than the Index, over the medium to long term. The strategy focus is to consistently generate excess returns by investing in highly cash flow generative companies with favourable outlooks that are trading at attractive valuations. While these opportunities are scarce, they are available in a variety of businesses, which can be identified and acted upon with rigorous research in an environment of intellectual freedom and strong risk management. To encourage this environment we apply a portfolio segmentation strategy that divides opportunities into Core, Cyclical or Opportunistic investments.
• Global share markets continued to weaken during September as long-term bond yields increased and the economy slowed.
• Growth stocks underperformed the broader market and interest rate sensitive stocks, such as information technology and real estate, were particularly weak.
• The Fund returned -4.6% in September, while the benchmark returned -3.8%.
Market Review
The global equity market sell-off which began in August continued through September. The US share market performed particularly poorly after continued strong economic data led the Federal Reserve to declare that it may need to keep interest rates higher for longer.
This pushed up ten-year US Treasury yields to levels not seen since 2007, denting the appeal of equities. The sectors most sensitive to rising interest rates, such as information technology and real estate, underperformed the most.
Japan’s stock market declined nearly 2% but was still the strongest-performing region. The Tokyo Stock Exchange’s January drive to reform capital allocation at companies with lowly valued shares continued to capture investor and management attention.
Meanwhile, hints from the new Bank of Japan Governor Kazuo Ueda that the country’s two-decade-long zero interest rate policy may soon be at an end further fuelled market sentiment.
What is Pengana International Pengana International is an Managed Funds investment product that is benchmarked against Developed -World Index and sits inside the Foreign Equity - Large Growth Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Pengana International has Assets Under Management of 107.66 M with a management fee of 0.97%, a performance fee of 0.00% and a buy/sell spread fee of 0.59%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Pengana International has returned -0.06% in the last month. The previous three years have returned 2.25% annualised and 10.74% each year since inception, which is when the Pengana International first started.
How is risk measured in this investment product?
There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Pengana International first started, the Sharpe ratio is NA with an annualised volatility of 10.74%. The maximum drawdown of the investment product in the last 12 months is -4.15% and -27.77% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product?
Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Pengana International has a 12-month excess return when compared to the Foreign Equity - Large Growth Index of -1.37% and -2.43% since inception.
Does the investment product produce Alpha over its Peers?
Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Pengana International has produced Alpha over the Foreign Equity - Large Growth Index of NA% in the last 12 months and NA% since inception.
What are similar investment products?
For a full list of investment products in the Foreign Equity - Large Growth Index category, you can click here for the Peer Investment Report.
What level of diversification will Pengana International provide?
Pengana International has a correlation coefficient of 0.92 and a beta of 0.97 when compared to the Foreign Equity - Large Growth Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers?
For a full quantitative report on Pengana International and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Pengana International with the Developed -World Index?
For a full quantitative report on Pengana International compared to the Developed -World Index, you can click here.
Can I sort and compare the Pengana International to do my own analysis?
To sort and compare the Pengana International financial metrics, please refer to the table above.
Has the Pengana International been independently verified by SMSF Mate?
This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
How can I invest in Pengana International?
How do I get in contact with the Pengana International?
Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Pengana International. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - August 31, 2023 • Global share markets were weaker in August across most sectors and regions as the global economy continued to slow and inflationary pressures persisted
• US dollar strength and China’s sluggish economy brought a weaker Australian dollar, boosting returns in AUD terms
• The Fund returned 0.6% in August, while the benchmark returned 1.1%
Market Review
Global equity markets suffered a broad sell-off in August, as some of the gains of recent months were unwound.
Signs of stubbornly high inflation brought concerns that global interest rates would be kept elevated for an extended period. This particularly impacted sentiment in the North American and European share markets.
Almost every region and sector made negative returns in local currency terms. The only exception was the energy sector, which outperformed after oil prices rebounded following production cuts by Saudi Arabia and Russia.
A faltering economy and continued weakness in its highly leveraged property sector pushed Chinese stocks lower.
This weakened demand for materials and manufactured goods across global markets.
Technology and consumer stocks were generally weaker during August. However, the Fund’s holdings in businesses that are exposed to innovation in artificial intelligence (AI), such as Nvidia, Alphabet, and Amazon, continued to perform relatively well.
Performance Commentary - July 31, 2023 • Global share markets strengthened in July as inflationary pressures eased across developed economies and China indicated it would stimulate its sluggish economy
• Big tech companies performed well upon ongoing AI-related excitement, while lower quality stocks outperformed upon optimism that the US will avoid recession
• The Fund returned 1.5% in July.
Market Review
Global equity markets performed strongly in local currency terms during July. The US Federal Reserve increased interest rates by 0.25% to 5.25% – 5.50% in a move which was seen by some investors as the final interest rates hike in this cycle as inflationary pressures ease.
In Emerging Markets, China’s share market surged nearly 11% as the government unveiled a series of measures which are intended to boost domestic consumption. International stocks in the materials sector rallied on the prospect of a recovery in China that will boost activity in its construction industry. Meanwhile, enthusiasm for the prospects of companies with business models aligned to innovation in artificial intelligence (AI) brought strong outperformances by some stocks in the communication services sector.
Having contributed to relative performance during the first half of the year, the Fund’s quality style detracted from returns in July. The lowest quality quintile of companies in the MSCI ACWI Index (i.e. the bottom 20% of stocks, which the investment manager ranks on quality characteristics such as profitability, balance sheet strength and earnings growth) is a segment in which the Fund is underinvested. However, it outperformed the highest quality quintile by over 4.0% during July. This reflected optimism that the US will avoid a recession following publication of more resilient economic data.
Performance Commentary - June 30, 2023 Global share markets rose this month, with all sectors and major regions recording positive performance. In the US, the Federal Reserve paused its rate-hiking campaign, while simultaneously suggesting that two more hikes of 0.25% later in the year may still be necessary. Monetary conditions in other parts of the world continued to tighten, however, with the European Central Bank increasing its main interest rate to address persistent regional inflation.
Meanwhile, China’s central bank—facing a stalled economic rebound—chose to loosen its key lending rates, and the Bank of Japan maintained its ultra-accommodative policy despite signs of nascent inflation. Commodities rebounded substantially in mid-June; however, this resurgence lost steam, primarily due to increasing apprehensions about the health of the Chinese economy.
Following a very strong run this year, and boosted by investor optimism surrounding artificial intelligence (AI) in May, some of our Information Technology (IT) holdings including US chip design software company Synopsys and US tech giant Alphabet gave back some gains in June.
Our Health Care holdings continued to outperform, with UK-based biotechnology company Abcam up over 50% on the month as the company announced that it had received acquisition inquiries from multiple parties.
We recently initiated a new position in US-based cosmetics company Estée Lauder. The company has been struggling post-pandemic, with a severe inventory glut in products sold at travel hubs in China and South Korea.
The company’s US-centric R&D and manufacturing capacity have led to a long and inflexible supply chain for Asia that complicates its ability to address its excess inventory problems. However, the company has recently taken steps to remedy this, opening a state-of-the-art R&D centre in Shanghai and announcing plans to open its first Asian manufacturing plant in Japan in 2023. These actions, coupled with Estée Lauder’s continued strength in product innovation and consumer brand appeal, should help it overcome its current challenges and sustain long-term growth.
Performance Commentary - May 31, 2023 The Fund benefitted in May from its overweight exposure to information technology and communication services. These sectors outperformed the broader market as investors focussed on opportunities which AI is expected to deliver.
However, the Fund’s largest active weight is in health care, where as in the tech sectors, secular growth trends and innovation create opportunities but also attract competition. The Fund holds several biotech companies, a segment traditionally characterised by weak profitability. However, strong research and development by companies in the Fund has helped generate strong cash flows. This has been achieved by developing next-generation treatments that meaningfully improve the standard of patient care ahead of competitors. High levels of trust in established brands enables these first movers to capture new markets, delivering early commercial success. These factors contributed to the Fund’s health care positions outperforming during May.
US-based biopharmaceutical group Vertex Pharmaceutical’s new triple-combination therapy is extending its dominance in the treatment of cystic fibrosis. US pharmaceutical company AbbVie, a leader in arthritis treatment, known for its blockbuster Humira antibody, has also developed next-generation products Rinvoq and Skyrizi (which are also used to treat psoriasis).
Performance Commentary - April 30, 2023 Global share markets strengthened in April as economic data remained resilient and company earnings exceeded investor expectations.
Australian dollar weakness supported share market returns in AUD terms.
The Fund returned 2.2% in April, while the benchmark returned 2.8%
Performance Commentary - March 31, 2023 Global share markets strengthened in March, led by large US tech stocks, but offset by weakness in the banking sector.
Australian dollar weakness supported share market returns in AUD terms.
The Fund returned 1.8% in March, while the benchmark returned 3.8%.
Performance Commentary - February 28, 2023 Global share markets weakened in February as signs of growing inflationary pressures led to expectations that interest rates have further to rise than previously expected.
Lower global share markets were offset by a weaker Australian dollar.
The Fund returned 0.5% in February, while the benchmark returned 1.5%
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