Asian equity markets declined in local currency terms over the month, however a 5.4% depreciation of the Australian Dollar more than offset these declines for the quoted AUD MSCI Asia ex Japan Index. The underlying equity portfolio outperformed broader markets given the limited exposure to the technology and internet sectors, which were amongst the weakest performers in April. CNOOC Limited, TravelSky Technologies and SABECO were amongst the positive contributors to performance while Frontier Digital Ventures, Wynn Resorts and Freeport McMoRan were the largest detractors.
The sell down of the portfolio commenced after the mandatory 28-day notice period lapsed (22 April 2022) and at month end the Fund had liquidated the majority of its positions resulting in cash holdings increasing to 90.6%. The process of portfolio liquidation and the conversion of funds back into Australian Dollar also impacted relative performance as Asian markets appreciated in the last week of April.
What is PM Capital Asian Companies PM Capital Asian Companies 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 PM Capital Asian Companies has Assets Under Management of 21.46 M with a management fee of 1.4%, a performance fee of 0 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 PM Capital Asian Companies has returned -1.11% in the last month. The previous three years have returned 1.96% annualised and 14.40% each year since inception, which is when the PM Capital Asian Companies 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 PM Capital Asian Companies first started, the Sharpe ratio is 0.75 with an annualised volatility of 14.40%. The maximum drawdown of the investment product in the last 12 months is -6.74% and -30.06% 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 PM Capital Asian Companies has a 12-month excess return when compared to the Foreign Equity - Asia ex Jap Index of 17.65% and 159.15% 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. PM Capital Asian Companies has produced Alpha over the Foreign Equity - Asia ex Jap Index of -3.09 in the last 12 months and 0.24 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 PM Capital Asian Companies provide?
PM Capital Asian Companies has a correlation coefficient of 0.54 and a beta of 0.74 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 PM Capital Asian Companies and its peer investments, you can click here for the Peer Investment Report.
How do I compare the PM Capital Asian Companies with the World Emerging Markets Index?
For a full quantitative report on PM Capital Asian Companies compared to the World Emerging Markets Index, you can click here.
Can I sort and compare the PM Capital Asian Companies to do my own analysis?
To sort and compare the PM Capital Asian Companies financial metrics, please refer to the table above.
Has the PM Capital Asian Companies 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 PM Capital Asian Companies?
How do I get in contact with the PM Capital Asian Companies?
Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the PM Capital Asian Companies. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - March 31, 2022 The portfolio was negatively impacted by a selloff in Chinese equities over the period. While the portfolio maintains a meaningful position in Chinese facing businesses, an overweight commodities position and the decision to run a higher cash balance after realising several investments supported relative performance.
China’s largest COVID-19 outbreak since the start of the pandemic, growing concerns around China’s involvement in the Russia-Ukraine conflict and the potential delisting of US-listed Chinese ADR’s were all factors in a sharp selloff in Chinese equities over the month. Chinese ADR’s were once again in focus after five companies were identified as being at risk of delisting for failing to adhere to the Holding Foreign Companies Accountability Act. The Act, passed last year, requires the SEC to prohibit the securities of any company from being traded on U.S. exchanges if its auditor is not subject to inspection by the U.S. Public Company Accounting Oversight Board (“PCAOB”) for three consecutive years, beginning in 2021. The portfolio’s only ADR position,
Melco Resorts and Entertainment, sold off on these developments. TravelSky was negatively impacted by the recent COVID-19 outbreaks and lockdowns seen in Shenzhen and Shanghai. Rising COVID-19 cases will delay the recovery in aviation activity which TravelSky directly benefits from. Commodity prices experienced a sharp spike in March as investors assessed the impact the escalating conflict between Russia and Ukraine will have on commodity markets. Most notable were the price moves in oil, coal, nickel and wheat given the importance Russia (and Ukraine) play in supplying those markets. Positive contributors to performance included CNOOC, Freeport McMoRan and MMG Limited.
Performance Commentary - February 28, 2022 Frontier Digital Ventures was the single biggest detractor to performance over the month despite reporting a solid full year result. This underscored the progress the company has made in its pursuit of their ‘Classified 2.0 Strategy’ which aims to embed the business at the centre of property and automotive transactions. We believe the economics of this model will be superior to the legacy classifieds business of collecting fees for providing a passive listing service. Frontier Digital Ventures’ performance mirrors that of other ASX listed online classified businesses REA Group, Carsales and Seek Ltd. (not held) which have all declined more than 20% from their 52-week highs. The portfolio’s commodity and energy holdings acted as a counterbalance to broad market weakness and assisted relative performance. Industrial metals and energy prices advanced over the month as investors evaluated the impact a conflict in Ukraine and the subsequent sanctions on Russia would have on the supply of natural resources. CNOOC remains well supported with spot Brent Crude Oil approaching the $100 mark for the first time since 2014, while Freeport McMoRan benefited from higher copper and gold prices.
Performance Commentary - January 31, 2022 CNOOC announced various capital management initiatives at its annual strategy briefing in January in an effort to address the company’s relative valuation discount to international peers.
CNOOC has committed to minimum annual dividend which implies 8% yield in each of the next three years. We think at spot this will be materially higher, likely in excess of 10%. It also plans to announce a special dividend and the details of an inaugural buyback program at its upcoming F22 results.
China Mobile also announced plans to buy back US$12.5bn of h-share stock after completing its a-share IPO. The buyback represents about 10% of its issued h-shares.
Performance Commentary - December 31, 2021 The portfolio returned 4.1% over the quarter. The main positive contributors were our positions in the copper companies Freeport McMoRan and First Quantum Minerals in addition to our position in alternative asset manager Apollo Global Management.
Copper positions were a key contributor to returns for the quarter with several catalysts supporting strong share price performances. Supply disruptions have again come into focus with MMG’s Peruvian Las Bambas mine forced to cease production given community protests along its primary transportation routes. Las Bambas contributes between 1-2% to annual copper supply when fully operational. Supply disruptions are of heighted importance given the physical copper market remains very tight with inventories at historically low levels. An increased focus on inflation and inflation beneficiaries also buoyed copper/ gold producers over the month.
Performance Commentary - November 30, 2021 The portfolio was negatively impacted by the emergence of the Omicron Covid-19 variant which the World Health Organisation announced as a ‘variant of concern’ in late November. Portfolio positions that were leveraged to the reopening of global borders and a corresponding acceleration in economic activity were most impacted. Commodities were also weaker, most notably oil, which impacted our commodity holdings. The Australian dollar continued its downward trend in November finishing near to its twelve-month low relative to the US dollar. The US dollar has been the overriding factor in currency markets, appreciating against most crosses. Our Australian dollar exposure does not cost us per se; however we do not capture the full benefit of stronger foreign currencies on our overseas holdings and a relative comparison to the broader index is negatively impacted. The portfolio continues to run with a material cash balance of 12% and this elevated cash position puts us in a strong position to take advantage of any short-term disruption in markets to either add to existing positions or initiate positions where we have been patiently waiting for an entry point.
Performance Commentary - October 31, 2021 Classified holdings iCar Asia and Frontier Digital Ventures contributed positively. iCar Asia signed binding transaction documents with Carsome at a revised $0.53 per share, the Scheme of Arrangements will now proceed to a shareholder vote. Frontier Digital Ventures reacted positively to a quarterly update which again showed the strong recovery experienced by its classified portfolio since the onset of Covid19. Property classified businesses Zameen and Infocasas were standouts as transaction linked revenues continue to drive rapid revenue growth. Copper producer Freeport McMoRan rebounded strongly in October, benefiting from a higher copper price. Furthermore, strong third quarter results underscored the positive operating leverage the business has in the current commodity price environment. Freeport continues to deleverage at a much faster rate than analysts had previously expected and subsequent to month’s end announced a new capital management program which includes a $3bn buyback program.
Performance Commentary - September 30, 2021 Macau’s government commences its long-awaited gaming law review • Commodities take a breather after period of strong performance as investors focus on economic growth in China • Consumer holdings provide support to performance.
The portfolio declined 1.5% in September compared to the market which declined 3%. Gaming positions detracted from performance after the Macau government formerly commenced a review of the city’s current gaming law which precedes the upcoming license tendering process. While these two events had been expected, the release of the government’s official public consultation document was negatively received by the investors. The primary areas of concern centre around three areas of debate raised by the government; 1. more formalised oversight for government over operations, 2. increased control over dividends and 3. increasing local ownership. We will discuss these issues in greater depth in the September quarterly. China’s economic growth trajectory was at the forefront of debate in September as investors weighed the impact of an impending debt default at property developer Evergrande and a mounting electricity supply crisis which has triggered a temporary shutdown of several energy intensive industries. Industrial metals were weaker as a result, most notably iron ore which is closely tied to the Chinese property sector. The weakness in commodity prices flowed through to our copper holdings.
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