Pendal Asian Share Fund aims to provide a return (before fees, costs and taxes) that exceeds the MSCI AC Asia ex Japan (Standard) Index (Net Dividends) in AUD over the medium to long term. This Fund is designed for investors who want the potential for long term capital growth from a concentrated portfolio of Asian shares and are prepared to accept high variability of returns.
Investors entered 2021 in risk-on mode. There was much to cheer about with the strong momentum in global growth in the latter part of 2020 carrying over into the new year; optimism that a US Democratic sweep of the White House, Congress and Senate bodes well for a fiscal stimulus boost to prevent the US economy from stalling; vaccine rollouts across the world gained traction albeit with some hiccups; and the US Federal Reserve pledged to maintain its quantitative easing programme until substantial progress had been achieved on its employment and inflation goals. However, the equity gains were pared back considerably in the final week of January as profit-taking set in.
The portfolio underperformed in January with country allocation effects offsetting positive stock selection. Whilst our Korean and Taiwanese names performed well, our overweight in India and underweight in China weighed on relative returns. Financials SBI Cards and Hong Kong Exchanges added value while Li Ning ran into some profit taking after a strong run.
All the well-worn arguments about low interest rates, the Fed ‘put’, continuing liquidity injection, US dollar weakness and vaccine rollouts have propelled stock prices higher. Yet, I think this environment requires a degree of prudence. This is a liquiditydriven bull market which central banks might not derail. However, could this wild exuberance lead to a financial accident? The almost parabolic rise in stocks fuelled by leveraged option buying, which, in many cases, is pure speculation rather than grounded on sound cash flow expectations, is not a healthy situation. I would prefer to stand back and allow sentiment and overbought conditions to moderate.
What is Pendal Asian Share Pendal Asian Share is an Managed Funds investment product that is benchmarked against World Emerging Markets Index and sits inside the Foreign Equity - Asia ex Jap 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 Pendal Asian Share has Assets Under Management of 68.03 M with a management fee of 1%, a performance fee of 0.00% and a buy/sell spread fee of 0.5%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Pendal Asian Share has returned 3.39% in the last month. The previous three years have returned -1.77% annualised and 12.95% each year since inception, which is when the Pendal Asian Share 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 Pendal Asian Share first started, the Sharpe ratio is NA with an annualised volatility of 12.95%. The maximum drawdown of the investment product in the last 12 months is -2.67% and -40.33% 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 Pendal Asian Share has a 12-month excess return when compared to the Foreign Equity - Asia ex Jap Index of 2.15% and -1.83% 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. Pendal Asian Share has produced Alpha over the Foreign Equity - Asia ex Jap 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 - Asia ex Jap Index category, you can click here for the Peer Investment Report.
What level of diversification will Pendal Asian Share provide? Pendal Asian Share has a correlation coefficient of 0.88 and a beta of 0.56 when compared to the Foreign Equity - Asia ex Jap 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 Pendal Asian Share and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Pendal Asian Share with the World Emerging Markets Index? For a full quantitative report on Pendal Asian Share compared to the World Emerging Markets Index, you can click here.
Can I sort and compare the Pendal Asian Share to do my own analysis? To sort and compare the Pendal Asian Share financial metrics, please refer to the table above.
Has the Pendal Asian Share 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.
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Comments from SMSF Mates SMSF Mate does not receive commissions or kickbacks from the Pendal Asian Share. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - December 31, 2020 Asian equities ended the year on a high note after a roller-coaster year which saw global equity markets plunge in March as the world came to grips with the Covid-19 pandemic, and then stage a spectacular rebound as governments and central banks took aggressive fiscal and monetary policies to prevent a large scale collapse of businesses and tightening of credit conditions. While the pandemic rages on, the emergency approval of a few Covid-19 vaccines have given hope that there is light at the end of the tunnel. But the US and Europe, and even parts of Asia which had previously managed to contain the outbreak during the first wave, are now grappling with a resurgence in cases with infection rates and the death toll remaining high.
The portfolio performed well over the month with our consumer discretionary names the main driver of relative returns. Here, our underweight in Alibaba was helpful. The regulatory clampdown here clearly indicates a changed approach to large dominant technology platforms. This government-imposed oversight could lead to lower-than-expected returns on capital and act as a dampener on valuations. On the negative side, India’s Manappuram Finance was the main laggard. The portfolio has a sizeable allocation to India. A collapse in domestic demand combined with lower oil prices means a current account surplus in India after nearly two decades. India has witnessed much lower interest rates thanks to capital flows into Asia in general. Both those factors drive liquidity into financial assets.
Performance Commentary - November 30, 2020 Asian equities soared higher in November in line with the US and European markets. Investors were buoyed by news that vaccines being should be rolled out earlier than expected.
Investors looked past the renewed surges of Covid-19 infections in the US and Europe and fears that the fragile economic rebound could experience a double-dip and instead focused on the longer-term economic rebound. Indeed, bad news on the economic front is taken as good news for stock markets as the weak economic backdrop forces the hands of policy makers to keep the spigots flowing on the fiscal and monetary fronts to prop up economies. The portfolio underperformed over the month with the negative relative return largely down to sector allocation effects, namely our overweight in consumer discretionary. Although this overweight provided a drag, stock selection here was strong helping to offset weakness among some of our financials holdings.
Our underweight in Alibaba added value after the suspension of Ant Financial’s highly anticipated IPO while SBI Cards was the main laggard.
Performance Commentary - October 31, 2020 Asian equities edged marginally higher in October. Initial gains made earlier in the month on optimism of a Democratic sweep of the US Presidency, House of Representatives and Senate in the November election, which will enable a larger fiscal stimulus to prop up the pandemic-stricken economy, gave way to profit-taking amid a resurgence in Covid-19 cases in the US and across Europe and concerns over further lockdowns.
The portfolio performed broadly in line with the index over the month as modestly negative stock selection offset positive sector allocation effects. Our underweight in energy was helpful as was our significant overweight in consumer discretionary. Looking at stock selection, it was our financials, which provided the main drag. Here, SBI Cards in India was the chief source of weakness. Nevertheless, we are optimistic. In India, the opportunity for unsecured credit remains large. While events like Covid-19 have disrupted this trend, it should not derail it.
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