Pendal Concentrated Global Share aims to provide a return (before fees, costs and taxes) that exceeds the MSCI World ex Australia (Standard) Index (Net Dividends) in AUD over the medium to long term. The Fund is designed for investors who want the potential for long term capital growth from a concentrated portfolio of global shares, diversified across a broad range of global share markets and are prepared to accept higher variability of returns. The Fund invests in global companies that offer attractive investment opportunities predominately in markets such as the USA, UK, Continental Europe, Asia and Japan. The Fund may also hold cash and use derivatives.
The Fund performed broadly in line with the benchmark in December. Our holding in Oracle outperformed this month after delivering better than expected second quarter results. Whilst top line growth remains muted, it was ahead of expectations and the business continues to transition away from on premise to a cloud strategy along with the accompanying recurring revenue streams. Their autonomous data base product, as previously guided is unique to the market and gaining traction with customers. The growth in the app business also appears to be at the expense of the competition.
Operating costs have been further reigned in, and the company continue to buy back shares resulting in better than expected earnings per share growth. Management were confident on the outlook for the business going into 2021, and we believe current valuation does not give the company credit for what is increasingly looking like a successful transition from an on premise technology company to one in which in its primary products are offered via the cloud. After months of speculation the US Federal Trade Commission (FTC), along with a coalition of 45 State Attorney Generals’ filed a lawsuit against Facebook in December.
As a result the company was an underperformer in the fund this month; down ~1.5%. The FTC allege illegally maintained monopoly power through anticompetitive conduct which highlights the firm’s acquisition of both Instagram & WhatsApp. Whilst we do not profess to be experts in US competition law, we note that both acquisitions were approved by regulators in 2012/2014. Whilst we believe that existing laws regulating the technology sector are not “fit for purpose”, we believe it will be difficult for regulators under the current law to unwind transactions that have been previously approved after lengthy regulatory scrutiny.
We would prefer to see global regulators, politicians and industry leaders come together to form a consensus for a sensible regulatory framework which provides for consumer protection, and consumer choice whilst not inhibiting innovation and technological advancement. The FTC litigation will likely be a prolonged event, however in the interim it is pleasing that Facebook have prioritised discussing and solving for some of the challenges faced by running a global technology company with more than 2.5bn monthly active users. Our holding in Discovery Communications outperformed in December after hosting an investor day in December. Company management outlined a direct to consumer (DTC) strategy which will transition their business from a purely traditional pay tv distributor.
As of January 2021, Discovery will launch discovery+, a DTC service offered in two tiers (add supported & and ad free). Discovery have a library of content of 300+ hours of non fiction programming with notable offerings that span across lifestyle, home, food, natural history and science programs. The DTC offering will launch with over 55000 episodes and 50 original series. discovery+ will be rolled out across 25 international markets over the course of the year, leveraging the largest global offering of unscripted content . We met with management at the end of 2019 where they outlined a strategy to build out their owned content in preparation for a launch of a DTC offering and we have been impressed with progress to date. We look forward to the next step; monetising the opportunity.
What is Pendal Concentrated Global Share Pendal Concentrated Global Share is an Managed Funds investment product that is benchmarked against Developed -World Index and sits inside the Foreign Equity - Large Fundamental 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 Concentrated Global Share has Assets Under Management of 55.20 M with a management fee of 0.9%, a performance fee of 0.00% and a buy/sell spread fee of 0.41%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Pendal Concentrated Global Share has returned 1.88% in the last month. The previous three years have returned 8.21% annualised and 12.13% each year since inception, which is when the Pendal Concentrated Global 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 Concentrated Global Share first started, the Sharpe ratio is NA with an annualised volatility of 12.13%. The maximum drawdown of the investment product in the last 12 months is -5.26% and -19.45% 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 Concentrated Global Share has a 12-month excess return when compared to the Foreign Equity - Large Fundamental Index of -6.24% and -1.22% 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 Concentrated Global Share has produced Alpha over the Foreign Equity - Large Fundamental 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 Fundamental Index category, you can click here for the Peer Investment Report.
What level of diversification will Pendal Concentrated Global Share provide?
Pendal Concentrated Global Share has a correlation coefficient of 0.85 and a beta of 0.65 when compared to the Foreign Equity - Large Fundamental 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 Concentrated Global Share and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Pendal Concentrated Global Share with the Developed -World Index?
For a full quantitative report on Pendal Concentrated Global Share compared to the Developed -World Index, you can click here.
Can I sort and compare the Pendal Concentrated Global Share to do my own analysis?
To sort and compare the Pendal Concentrated Global Share financial metrics, please refer to the table above.
Has the Pendal Concentrated Global 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 Concentrated Global Share. All data and commentary for this fund is provided free of charge for our readers general information.
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