Pendal Active Moderate Fund aims to provide a return (before fees, costs and taxes) that exceeds the Fund’s benchmark over the medium to long term. This Fund is designed for investors who want the potential for long term capital growth and income, diversification across a broad range of asset classes and are prepared to accept some variability of returns.
The Fund underperformed the benchmark over the month of January. We have added a new investment, the Regnan Global Equity Impact Solutions strategy, to the fund with a target allocation of 10% of global equities, which is expected to enhance both returns and diversification within the portfolio. Regnan Global Equity Impact Solutions aims to generate market-beating long-term returns by investing in solutions to the world’s environmental and societal problems. The Strategy is a high conviction, diversified, global multi-cap portfolio with low turnover and a strong emphasis on driving impact through engagement.
The experienced four person Equity Impact Solutions team aims to generate long-term outperformance by investing in mission-driven companies that create value for investors by providing solutions for the growing unmet sustainability needs of society and the environment. Our active positioning at the start of January was more risk-on than in recent months and was not immune to the recent Reddit-driven market turmoil, recording a modest negative contribution to returns in January all of which occurred in the last 3 days of the month. Market events such as these, while meaningful to those directly involved and providing plenty of entertaining content for market commentators, are essentially “noise” in the context of our investment process and, at the time of writing, January’s negative returns have been more than fully recovered. In equities, our active positioning driven by valuation insights held overweights in Mexico’s Bolsa, long positions in the futures of EURO STOXX 50 dividends paid in the calendar year 2024 and FTSE 100 dividends paid in the calendar year 2023, and overweights to both global and Australian listed property, all of which screened amongst the most under-valued markets in the universe which we monitor. The portfolio was long equity volatility carry through VIX futures. On the other side we held short positions the Italian FTSE MIB, French CAC 40 and US S&P-500 indices, all of which are considered expensive within our valuation framework. Our trend-following process held overweights to S&P-500, offsetting the above mentioned valuation underweight, Australia’s S&P/ASX-200 and Germany’s Dax indices.
At the end of the month the S&P/ASX-200 overweight was closed, leaving the portfolio a little less “risk-on”, but still positioned overall to benefit from rising equity markets. In fixed income, the portfolio was directionally neutral with overweights in Australian and Canadian 10-year bonds offset by underweights in German Bunds, US 10-year Notes and UK Gilts. At the end of the month or valuation framework turned more positive on Australian and Canadian bonds in response to the higher interest rates now on offer and our long positions in these markets were increased. The overall portfolio is now modestly overweight fixed income, expressed through these two markets.
The Australian “3s-10s curve flattener” (which holds a long position in 10-year bond futures combined with a larger notional short position in 3-year bond futures) and the Australian 10s-20s curve flattener were both held unchanged. Both curves have steepened recently offering attractive carry-based returns to those with the ability to patiently wait for reversion to historical norms. In commodities, the portfolio remained long copper, gold and Brent crude oil. Our active positioning at the start of February is risk-on, but less so than January. The portfolio is positioned with overweights in a range of under-valued equity markets, underweights in expensive equity markets, long equity volatility carry and overweight markets exhibiting strong upward trends.
Fixed income positions are predominantly relative value in nature, with a net overweight to Australian and Canadian bonds. In commodities, we hold long positions in copper, gold and Brent crude oil.
What is Pendal Active Moderate Fund Pendal Active Moderate Fund is an Managed Funds investment product that is benchmarked against Multi-Asset Balanced Investor Index and sits inside the Multi-Asset - 41-60% Diversified 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 Active Moderate Fund has Assets Under Management of 31.08 M with a management fee of 0.85%, a performance fee of 0.00% and a buy/sell spread fee of 0.25%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Pendal Active Moderate Fund has returned 3.5% in the last month. The previous three years have returned 3.76% annualised and 6.6% each year since inception, which is when the Pendal Active Moderate Fund 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 Active Moderate Fund first started, the Sharpe ratio is 0.53 with an annualised volatility of 6.6%. The maximum drawdown of the investment product in the last 12 months is -4.98% and -11.2% 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 Active Moderate Fund has a 12-month excess return when compared to the Multi-Asset - 41-60% Diversified Index of 0.57% and -0.46% 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 Active Moderate Fund has produced Alpha over the Multi-Asset - 41-60% Diversified Index of 0% in the last 12 months and -0.04% since inception.
What are similar investment products?
For a full list of investment products in the Multi-Asset - 41-60% Diversified Index category, you can click here for the Peer Investment Report.
What level of diversification will Pendal Active Moderate Fund provide?
Pendal Active Moderate Fund has a correlation coefficient of 0.98 and a beta of 1.15 when compared to the Multi-Asset - 41-60% Diversified 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 Active Moderate Fund and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Pendal Active Moderate Fund with the Multi-Asset Balanced Investor Index?
For a full quantitative report on Pendal Active Moderate Fund compared to the Multi-Asset Balanced Investor Index, you can click here.
Can I sort and compare the Pendal Active Moderate Fund to do my own analysis?
To sort and compare the Pendal Active Moderate Fund financial metrics, please refer to the table above.
Has the Pendal Active Moderate Fund 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
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