The Net tangible asset value before provision for tax on unrealized income and gains was at 111.87 cents per share with a provision for tax on unrealized income and gains of 1.14 cents per share. The net tangible asset value after provision for tax on unrealized income and gains was at 113.01 cents per share as per the weekly update.
Given the benchmark declined 1.8%, the portfolio was up 0.3% in November, which was pleasing to the investors. Stocks they own were the largest positive contributor to outperformance and delivered almost 1% of absolute performance.
Stocks they didn’t own were another contributor to the outperformance, having dramatically reduced the exposure to the in-vogue US internet sector earlier this year, including Apple, which was the largest drag to the benchmark’s November return.
The largest performance headwinds during the month were the puts (portfolio insurance) and foreign exchange (FX). The appreciating AUD explained the FX movement while the puts declined due to the rising US market. The company structures the portfolio with the intention of reducing drawdowns and volatility, and they are pleased to have delivered on these goals. The three largest positive stock contributors were Huazhu Group, Tencent and Alibaba, reflecting the strength of the Chinese market. The three largest stock detractors were Sligro Food Group, Nutrien, and Sandvik. Nutrien’s share price declined in conjunction with the oil price, Sligro Food Group was downgraded by analysts and Sandvik was weak due to declining commodity prices. The portfolio’s largest industry exposures during the month were Consumer Discretionary, Financials, and Health Care.
The weight of the Core segment remains within 60- 70%, Cyclicals approximately 10% and Opportunistic within 5-10% of the portfolio. The Financials exposure reflects notable investments across derivative exchanges, which they expect will benefit from increased asset market volatility. The Consumer Discretionary exposure includes a broad basket of companies, many of which they don’t consider as truly Consumer Discretionary, e.g. TomTom. Tom Health Care exposure is relatively diversified. Compared to the benchmark, the portfolio continues to have relatively large exposure to Emerging Markets – Asia (13%) and Europe + UK (29%), while having a significantly underweight exposure to the US (43%).
Pengana International Equities Limited (ASX: PIA) traded flat as at December 28, 2018, to $1.065. The all-time performance change for the company is of 107.40%.
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