The Pendal Concentrated Global Share Fund No.3 (Fund) is an actively managed concentrated portfolio of global shares. It 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 sharemarkets and are prepared to accept higher variability of returns.
The Fund outperformed in the December quarter. The quarter rounded off a tumultuous year which concluded with the approval, and the initial batches of COVID 19 vaccine being administered, a Biden victory in the US elections, further US fiscal stimulus and the signing of the BREXIT trade deal. Markets ended the year on their highs, despite record numbers of COVID cases being recorded globally and with the outcome of the US Senate elections yet to be decided. It appears likely that many forms of restrictions will remain in place globally until a vaccination has been widely distributed and efficacy is certain. As a consequence, we expect operating conditions for many companies to remain challenging for some time. We continue to focus on owning the companies we know can survive the pandemic, and prosper post pandemic. Our positons in financials outperformed this quarter. The US Federal Reserve, after a second round of “stress tests” on US banks announced a partial relaxation of its buyback ban announced in the wake of the COVID outbreak. Whilst dividends will continue to be capped, the Fed announcement signals confidence in the ability of US banks to withstand “severe adverse scenarios”. The UK and European regulators also took steps to partially lift constraints on capital returns, which underscores an increasing confidence in the sector’s ability to withstand the economic consequences of the pandemic. We share this confidence and believe our bank holdings are yet to reflect their capacity to grow their long term earnings.
The headlines pertaining to the roll-out of a COVID vaccine towards the end of the year saw the companies that were most impacted by COVID in our portfolio also outperform this quarter; that is airline manufacturers, casinos and airports. We initiated and added to these positions during the depths of the crisis, after a robust assessment of their balance sheets and longer term growth prospects. Whilst continued restrictions on travel and visitation are likely to be in place for some time, leading to shorter term volatility, we believe that that the market is yet fully reflect the longer term value of these businesses. Our holding in Infineon Technology was an outperformer this quarter after reporting third quarter results in November which signalled a bottoming of automotive market in the second quarter. Automotive industry sales account for 40% of Infineon’s total revenue. The company is not only leveraged to a recovery in automotive market, however more particularly their product set is to leveraged to the growth in electric vehicles.
A subsequent investor day in late November highlighted a further driver of future growth in the industrial power control segment which is well positioned to benefit from the structural growth in renewables, with the company supplying a broad spectrum of companies involving the delivery of renewable energy solutions. Research and development remains a focus for the company who are at the forefront of silicon carbide (SiC) technology, a material which solves for the problems faced by semiconductors manufactured with traditional silicon that are unable to withstand the higher voltages generated by power applications. With excess capacity, a leading positon in power management and a diversified customer base, we continue to belief the company will benefit from the structural demand drivers for electric vehicles, battery manag
What is Pendal Concentrated Global Share No.3 Pendal Concentrated Global Share No.3 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 No.3 has Assets Under Management of 38.79 M with a management fee of 0.9%, a performance fee of 0.00% and a buy/sell spread fee of 0.4%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Pendal Concentrated Global Share No.3 has returned 1.9% in the last month. The previous three years have returned 11.68% annualised and 12.52% each year since inception, which is when the Pendal Concentrated Global Share No.3 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 No.3 first started, the Sharpe ratio is 0.1 with an annualised volatility of 12.52%. The maximum drawdown of the investment product in the last 12 months is -5.59% and -52.54% 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 No.3 has a 12-month excess return when compared to the Foreign Equity - Large Fundamental Index of -6.64% and -1.12% 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 No.3 has produced Alpha over the Foreign Equity - Large Fundamental Index of -0.25% in the last 12 months and -0.09% 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 No.3 provide?
Pendal Concentrated Global Share No.3 has a correlation coefficient of 0.94 and a beta of 0.79 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 No.3 and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Pendal Concentrated Global Share No.3 with the Developed -World Index?
For a full quantitative report on Pendal Concentrated Global Share No.3 compared to the Developed -World Index, you can click here.
Can I sort and compare the Pendal Concentrated Global Share No.3 to do my own analysis?
To sort and compare the Pendal Concentrated Global Share No.3 financial metrics, please refer to the table above.
Has the Pendal Concentrated Global Share No.3 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 Pendal Concentrated Global Share No.3?
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Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Pendal Concentrated Global Share No.3. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - September 30, 2020 The Fund underperformed in the September quarter amid fears of a second wave of COVID-19, and the potential implications for the global economy as a consequence. It appears likely that many forms of restrictions will remain in place globally until a vaccination has been widely distributed. As a consequence, we expect operating conditions for many companies to remain challenging for some time. We continue to focus on owning the companies we know can survive the pandemic, and where we believe the market is not giving them credit for their post pandemic earnings power.
Our positions in financials underperformed this quarter. Uncertainty over credit losses, margin pressure as a result of low interest rates, and regulatory pressure seeking to enable the support of a functioning economy has contributed to pressure on share prices. Amid this environment the stronger banks have sought to consolidate their position, with a number of M&A deals in the quarter either speculated or announced. One such deal was the announcement by Caixa Bank, (a holding in the fund) that they would merge with rival Spanish Bank, Banxia. Caixa Bank will pay a total of 4.3bn euro for 100% of Banxia via a share swap, which equates to a price of .3x price to book value. The merger will create the largest banking franchise in Spain, with loan and deposit market shares of close to 30%. We view the cost saving and earnings accretion potential to be significant. As shareholders we would prefer the companies that we own to experience only optimal operating conditions, however when events outside the control of management present themselves it is pleasing, that they have foresight, and the courage to implement strategies for the long term good of shareholders.
Our holding in Intel Corporation, the world’s largest designer and manufacturer of semiconductor chips underperformed this quarter after the release of their second quarter result in July. Whilst the results were ahead of consensus estimates and the company also guided revenue for the full year which will represent their fifth consecutive year of record revenue, the market was disappointed by the suggestion that there would be delays to the release of their next generation semi-conductor chips. Intel is the world’s only designer & manufacturer of leading edge CPU chips for servers, PC and notebooks. This business accounts for ~50% revenues, and Intel’s only competitor is Advanced Micro Devices (AMD). AMD design the chips, however outsource manufacturing to semiconductor manufacturer, TSMC. Whilst Intel still retain over 80% share of the market, AMD have been growing share in the last two years. The CPU market is a mature market, which Intel acknowledged a number of years ago when they implemented a very deliberate strategy to leverage their scale, research and development budget to expand their total addressable market into other semi-conductor products. Whilst the manufacturing delays are disappointing, we believe the resulting share price declines failed to reflect the long term growth potential of this “data centric” business.
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