Pengana Australian Equities Fund
The Fund aims to enhance and preserve investor wealth over a 5- year period via a concentrated core portfolio of principally Australian listed securities.
The Fund invests principally in listed Australian equities. If Pengana cannot find appropriate securities that meet its investment criteria, the Fund’s assets are held in cash or cash equivalents.
The Fund’s investment objective is to achieve over the medium to long term an investment return, including capital appreciation, dividends and interest, in excess of the risk free rate (i.e., the Reserve Bank of Australia’s Cash Rate Target) plus a margin to compensate investors for the extra risk associated with investing in Australian equities (this is known as the “Australian equity risk premium”), with a volatility of return less than the Australian equity market.
The Fund may be suited to you if you want:
- to diversify your portfolio with Australian equity exposure managed by a specialist boutique manager
- a portfolio focussed on capital preservation over supernormal returns
For up to date fund statistics please find the latest monthly report here
Investment approach
Pengana believes that superior research provides conviction and, if acted upon in a timely manner, can be converted into investment opportunities and excess returns. Capital preservation is preferred over supernormal returns. This is achieved through a consistent focus in the security selection process and careful management of portfolio exposure.
The Fund employs research-based security selection, using fundamental company research with macro-economic overlays for portfolio construction. All positions are meaningful and assessed on a risk-reward basis, resulting in a portfolio with around 30-40 securities being held.
Investment process
The Fund’s Investment Team attends many company management meetings each year as an integral part of the idea generation, company valuation and portfolio management processes.
Access to external research is considered a valuable resource in supplementing idea generation, understanding industries and facilitating access to company management. Pengana maintains a database of valuation models on potential and existing investment opportunities. This is supported by regular updates from the fundamental research and this forms the analysis platform for assessing the appropriate acquisition price.
Pengana principally targets listed Australian companies capable of generating sustainable underlying cash earnings yields of 6 to 8% per annum with growth of 10 to 15% per annum. In addition, for capital preservation purposes, the company valuation is assessed with a margin of safety. This may be in the form of a strong underlying intrinsic asset valuation, low earnings multiple, regulated monopoly or other factors.
When Pengana is unable to find investments that meet its investment criteria, surplus funds will be held in cash or cash equivalents consistent with its objective of capital preservation. The Fund may invest in securities which are not listed in Australia but are listed on an overseas stock exchange. It will only do so if Pengana determines that the security listed on the overseas stock exchange is a better investment proposition than a similar security listed in Australia.
Indicative strategic asset allocation
Pengana aims to manage the Fund within the following guidelines:
- 0%-100% Australian equity securities and hybrids
- 0%-100% cash and cash equivalents
- 0%-20% listed bonds, securities in exchange traded funds, securities which are expected to be listed within 3 months of being acquired, derivatives and securities which are not listed in Australia but are listed on an overseas stock exchange
Pengana will endeavour to work within the above guidelines – however, these should be viewed as objectives only and not absolute limits.
Top Holdings can be viewed here
Latest Fund performance can be viewed here
Founded in 2003 and headquartered in Sydney, with offices in Melbourne, Brisbane, and Perth, Pengana currently manages over AUD$4 billion across a range of international and Australian strategies.
We hunt for the world’s leading investment teams in order to bring our investors unique, differentiated, and smart investment products.
Our unique business model also delivers centralised support from our corporate team, so our fund managers can focus on what they do best – managing portfolios.
Pengana’s premium investment products employ active strategies with non-benchmark mandates, giving our investment teams the freedom to invest in their best ideas.
With independent investment teams in Chicago, Connecticut, New Jersey, the United Kingdom, Israel, Melbourne, and Sydney, our range of independently managed investment strategies provides a well-blended and uncorrelated level of diversification.
Each strategy is run by a separate investment team with unique skills relevant to their investment class. Our focus and track record is to provide investors with long-term returns, adjusted for risk minimisation.
Pengana Capital is a wholly-owned subsidiary of Pengana Capital Group.
Rhett joined Pengana in October 2007, bringing with him over 18 years of experience as an investment professional.
He is responsible for leading Pengana Capital’s Australian equities team and managing the Pengana Australian Equities Fund.
Prior to joining Pengana, Rhett was Head of Research for IAG Asset Management (IAGAM) as well as a joint portfolio manager for various wholesale funds totalling $3.3 billion. In 2005 he successfully launched the IAGAM Absolute Return Fund, on which the Pengana Australian Equity Fund is based.
Rhett was previously a rated media analyst for UBS Australia, having emigrated from South Africa in 1996, where he successfully managed wholesale and retail equity portfolios as Deputy General of Investment for Liberty Asset Management.
Rhett holds a Bachelor's degree in Commerce and Accounting from the University of Witwatersrand in South Africa. He is also a Chartered Accountant (SA) and a Chartered Financial Analyst.
Anton joined Pengana in February 2009. Prior to joining Pengana, he was with Rand Merchant Bank for five years. In this role, he managed a proprietary value fund in Australia for two years and before that a similar RMB fund in South Africa.
Anton was also a co-principal of a market-neutral hedge fund based in South Africa. Previously, he was a director and fund manager at PSG Asset Management, responsible for managing a global equity fund and a rated sell-side analyst with ABM Amro covering industrial and consumer sectors.
Anton holds Bachelor's and Honours degrees in Commerce and Accounting from the University of Stellenbosch and Pretoria in South Africa. He is also a Chartered Accountant (SA), a Chartered Financial Analyst and a Chartered Management Accountant (UK).
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