Pendal Sustainable Balanced Fund aims to provide a return (before fees and expenses) that exceeds the Fund’s benchmark over the medium to long term. The suggested investment timeframe is five years or more. The 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 exposure to companies and issuers (within the Fund’s Australian and international shares and Australian and international fixed interest allocation) that demonstrate leading environmental, social and corporate governance (ESG) and ethical practices while avoiding exposure to companies and issuers with material involvement in activities we consider to negatively impact the environment or society and are prepared to accept some variability of returns.
The Fund underperformed the benchmark over the month of October. Active positioning contributed negatively to returns in October. Portfolios started the month positioned with overweights in a range of under-valued equity markets, a volatility carry position in VIX futures, plus overweights to S&P-500 and STOXX® Europe 600 ESG-X in equity trend-following, partially offset by an underweights in Dow Jones and ASX-200 while being meaningfully protected via options. Fixed income positions were mostly relative value in nature, with a small short bias. In commodities we held long positions in copper and gold.
In equities, our active positioning driven by valuation insights held overweight positions in Mexico’s Bolsa, a long position 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 volatility carry through VIX futures. On the other side we held a short position in Dow Jones, as US large cap equities trade materially expensive, however this was switched from Dow Jones to S&P-500 towards the end of the month, netting off against the trend-based S&P overweight, as the S&P-500 moved to be considerably more expensive than the Dow Jones. These mostly overweight positions are meaningfully hedged by an option strategy to protect against possible downside in Australian equities, which consists of buying a put spread, funded by selling an out-of-the money call option, all with an expiry in December: beyond the US presidential election and the associated event risk.
Attractive features of this hedging strategy are that the net premium cost was approximately zero and that the strike price of the sold call option is where we expected to be reducing exposure to Australian equities on a valuation basis at the time the trade was initiated. Our trend-following process held overweights to STOXX® Europe 600 ESG-X and S&P-500 and an underweight to S&P/ASX-200 during October. At the end of the month, the underweight ASX was closed and the STOXX® Europe 600 ESG-X trend switched from overweight to underweight, the combination of which slightly reduced the portfolio’s overweight to growth assets. In fixed income, the portfolio was slightly short with modest overweights in Australian and Canadian 10-year bonds more than offset by underweights in German Bunds, US 10-year Notes and UK Gilts. We took profit on half of 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), later adding a flattener in the 10- vs 20-year part of the curve. At the end of the month, the trend models re-initiated the overweight to German Bunds. In commodities, the portfolio was long copper and gold and short Brent crude oil. Our active positioning at the start of November remains risk-on but slightly less so than the prior month. The portfolio is positioned with overweights in a range of under-valued equity markets, long volatility carry, underweight STOXX® Europe 600 ESG-X in equity trend-following while being meaningfully protected via options. Fixed income positions are relative value in nature. In commodities, we hold long positions in copper and gold
What is Pendal Sustainable Balanced Fund Pendal Sustainable Balanced Fund is an Managed Funds investment product that is benchmarked against Multi-Asset Growth Investor Index and sits inside the Multi-Asset - 61-80% 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 Sustainable Balanced Fund has Assets Under Management of 128.81 M with a management fee of 0.8%, a performance fee of 0.00% and a buy/sell spread fee of 0.29%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Pendal Sustainable Balanced Fund has returned 4.35% in the last month. The previous three years have returned 5.55% annualised and 8.06% each year since inception, which is when the Pendal Sustainable Balanced 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 Sustainable Balanced Fund first started, the Sharpe ratio is 0.28 with an annualised volatility of 8.06%. The maximum drawdown of the investment product in the last 12 months is -6.38% and -25.65% 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 Sustainable Balanced Fund has a 12-month excess return when compared to the Multi-Asset - 61-80% Diversified Index of -0.44% and -0.66% 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 Sustainable Balanced Fund has produced Alpha over the Multi-Asset - 61-80% Diversified Index of -0.11% in the last 12 months and -0.05% since inception.
What are similar investment products?
For a full list of investment products in the Multi-Asset - 61-80% Diversified Index category, you can click here for the Peer Investment Report.
What level of diversification will Pendal Sustainable Balanced Fund provide?
Pendal Sustainable Balanced Fund has a correlation coefficient of 0.97 and a beta of 1.14 when compared to the Multi-Asset - 61-80% 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 Sustainable Balanced Fund and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Pendal Sustainable Balanced Fund with the Multi-Asset Growth Investor Index?
For a full quantitative report on Pendal Sustainable Balanced Fund compared to the Multi-Asset Growth Investor Index, you can click here.
Can I sort and compare the Pendal Sustainable Balanced Fund to do my own analysis?
To sort and compare the Pendal Sustainable Balanced Fund financial metrics, please refer to the table above.
Has the Pendal Sustainable Balanced 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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