Perennial Smaller Companies Sustainable Future Trust aims to outperform the benchmark over the long term after fees and expenses, by investing in a diversified portfolio of smaller companies that conduct business taking into consideration environmental, social and governance (‘ESG’) criteria and/or conduct business in industries which have favourable characteristics having regard to ESG criteria.
Global equity markets were generally weak during September in response to rising bond yields and the benchmark was down 4.0% during the month. The Trust was down 4.4% after fees in September and underperformed by 0.4%.
The absolute and relative performance of the Trust was weaker in the September quarter after strong performance in the June quarter. A significant contributor to relative performance during the month and the quarter was the weak performance of the Healthcare sector, which the Trust is overweight and outperformance of the Energy sector which the Trust is underweight. There has also been some stock specific weakness, particularly in Calix. Despite these short term movements, we remain comfortable with the portfolio and assuming that bond rates do not increase significantly from current levels, our forecasts suggests that the portfolio is well positioned going forward. During the month we used the market weakness to add to positions and have reduced the cash weighting in the portfolio to around 5% which is the lowest level in some time.
Positive held contributors to relative performance during September included EQT Holdings (+2.9%), 3P Learning (+10.4%), Telix Pharmaceuticals (+3.1%) and Genetic Signatures (+17.2%).
Negative contributors to relative performance during the month included Calix (-26.6%), Sims (-11.8%), Alpha HPA (-30.5%) and 4D Medical (-32.8%).
What is Perennial Smaller Companies Sust Fut Tr Perennial Smaller Companies Sust Fut Tr is an Managed Funds investment product that is benchmarked against ASX Index Small Ordinaries Index and sits inside the Domestic Equity - Micro Cap 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 Perennial Smaller Companies Sust Fut Tr has Assets Under Management of 2.59 M with a management fee of 1.2%, a performance fee of 1.32% and a buy/sell spread fee of 0.6%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Perennial Smaller Companies Sust Fut Tr has returned 5.03% in the last month. The previous three years have returned -1.18% annualised and 18.54% each year since inception, which is when the Perennial Smaller Companies Sust Fut Tr 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 Perennial Smaller Companies Sust Fut Tr first started, the Sharpe ratio is 0.38 with an annualised volatility of 18.54%. The maximum drawdown of the investment product in the last 12 months is -14.08% and -28.96% 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 Perennial Smaller Companies Sust Fut Tr has a 12-month excess return when compared to the Domestic Equity - Micro Cap Index of -6.47% and -0.79% 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. Perennial Smaller Companies Sust Fut Tr has produced Alpha over the Domestic Equity - Micro Cap Index of -0.5% in the last 12 months and 0.01% since inception.
What are similar investment products?
For a full list of investment products in the Domestic Equity - Micro Cap Index category, you can click here for the Peer Investment Report.
What level of diversification will Perennial Smaller Companies Sust Fut Tr provide?
Perennial Smaller Companies Sust Fut Tr has a correlation coefficient of 0.95 and a beta of 0.95 when compared to the Domestic Equity - Micro Cap 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 Perennial Smaller Companies Sust Fut Tr and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Perennial Smaller Companies Sust Fut Tr with the ASX Index Small Ordinaries Index?
For a full quantitative report on Perennial Smaller Companies Sust Fut Tr compared to the ASX Index Small Ordinaries Index, you can click here.
Can I sort and compare the Perennial Smaller Companies Sust Fut Tr to do my own analysis?
To sort and compare the Perennial Smaller Companies Sust Fut Tr financial metrics, please refer to the table above.
Has the Perennial Smaller Companies Sust Fut Tr 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 Perennial Smaller Companies Sust Fut Tr?
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Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Perennial Smaller Companies Sust Fut Tr. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - August 31, 2023 The benchmark gave back some of July’s gains during August, finishing down 1.3%. The Trust was down 3.5% after fees in August and underperformed by 2.2%.
The weak performance from the Trust was driven by a range of factors working against the portfolio. We remain comfortable with the positioning of the Trust and are becoming incrementally more positive from a broader market perspective as earnings expectations now seem more realistic after the recent reporting season.
Positive held contributors to relative performance during August included AUB Group (+7.5%), Australian Ethical (+8.7%), EQT Holdings (+3.7%) and G8 Education (+2.7%).
Negative contributors to relative performance during the month included Meridian Energy (-7.1%), PEXA Group (-12.8%), Genetic Signatures (-28.7%) and Iress (-38.3%).
Performance Commentary - July 31, 2023 The benchmark rose very strongly during July, up 3.5% as economic data suggested that the Reserve Bank of Australia may be closer to the end of the current interest rate tightening cycle. The Trust was up 1.1% after fees in July and lagged the rally given the relatively low exposure to cyclical stocks.
It is now over 5 years since the inception of the Trust and over this time the Trust has delivered a 8.1% p.a. return net of fees, outperforming the benchmark by 4.4% p.a.
Positive held contributors to relative performance during July included Australian Ethical (+23.2%), SmartGroup (+14.1%), Genetic Signatures (+16.2%) and Bendigo and Adelaide Bank (+8.8%).
Negative contributors to relative performance during the month included Integral Diagnostics (-7.6%), Sims Ltd (-4.1%), AUB Group (- 2.4%) and KMD Brands (-8.1%).
Australian Ethical delivered a better-than-expected quarterly update.
Smartgroup, which provides novated leases as part of its remuneration packaging business, was higher after comments from a smaller competitor that 36% of all novated leases delivered in 3Q23 and 45% of all novated delivered in June were electric vehicles.
Smartgroup is expected to benefit from similar trends following the introduction of government incentives for novated electric vehicles that was introduced in December 2022. Positively, for the nation’s greenhouse gas emission footprint, this suggests that the proportion of new vehicle sales that are powered by internal combustion engines and fossil fuels should start to decline at a faster rate.
Genetic Signatures delivered a better-than-expected quarterly update and indicated that, following delays, it expects to lodge the application for approval of the company’s next generation enteric (gastrointestinal) test during August.
Integral Diagnostics was weaker after Medicare data suggested that the recovery of diagnostic imaging volumes post-COVID continues to be softer-than-expected. Sims was weaker as global scrap metal prices were lower during the month and KMD announced a much weaker-than-expected trading update as a combination of a weaker consumer and warmer winter impacted sales.
At month end, the portfolio held 44 stocks and cash of 8.3%. At July end, the weighted average Perennial-derived Environmental, Social, Governance and Engagement (“ESGE”) Score of the Trust was 7.3 which is 29% higher than the benchmark ESGE Score of 5.7.
Performance Commentary - June 30, 2023 The Trust was up 2.3% after fees in June, outperforming the benchmark by 2.3%.
It is now over 5 years since the inception of the Trust and over this time the Trust has delivered a +8.0% p.a. return net of fees, outperforming the benchmark by 4.9% p.a.
Positive contributors to relative performance during June included AUB Group (+16.3%), Limeade (+229.2%), Sims Ltd (+10.9%) and Impedimed (+28.6%). Negative contributors to relative performance during the month included Pacific Edge (-79.7%), KMD Brands (-9.3%), 4D Medical (- 13.0%) and Telix Pharmaceuticals (-4.1%).
AUB was stronger after upgrading earnings and raising capital on attractive terms during May.
Limeade, which provides customised employee well-being programs to customers globally, received a takeover offer at a significant premium. This was a reasonable outcome for what has, in general, been a disappointing investment.
Impedimed made a number of significant announcements. The company’s SOZO device which is used to assess the risk of breast cancer survivors suffering from lymphoedema has achieved a number of key milestones in securing reimbursement from US health plans for SOZO tests. The process for securing reimbursement is necessarily fragmented given the large number of health plans in the US. The company has been seeking to secure reimbursement for several years and is now making significant headway after the process was mandated by the US National Cancer Care Network Survivorship guidelines in March. The most significant update during the month is that now over 80% of Michigan’s insured population has access to coverage for SOZO testing for lymphoedema. During the month, the company also announced the first published medical policy by Florida Blue, a significant insurer in the key state of Florida. Pacific Edge announced that US Medicare coverage of the company’s Cxbladder diagnostic tests is expected to cease in July. While it is not clear that the reasoning behind this administrative decision was made on a fully informed basis, the outcome was significantly worse than expected and will have a significant impact on the company’s business in the US in the short term. The impact on the portfolio was limited by the small position size. 4D Medical and Telix Pharmaceuticals gave up some of their recent gains.
At month end, the portfolio held 43 stocks and cash of 7.7%. At June end, the weighted average Perennial-derived Environmental, Social, Governance and Engagement (“ESGE”) Score of the Trust was 7.4 which is 29% higher than the benchmark ESGE Score of 5.7.
Performance Commentary - May 31, 2023 The benchmark was down 3.3% in May, giving up some of the recent gains. The Trust was down 2.5% after fees, outperforming the benchmark by 0.8%.
Positive contributors to relative performance during May included Telix Pharmaceuticals (+15.3%), Immutep (+13.2%), NIB Holdings (+9.5%) and Integral Diagnostics (+5.7%).
Negative contributors to relative performance during the month included G8 Education ( -14.3%), Impedimed (-24.3%), IDP Education ( -22.5%) and Sims (-9.3%).
Performance Commentary - April 30, 2023 The Trust was up 6.4% after fees during the month, outperforming the benchmark by 3.6%.
The benchmark finished 2.8% higher in April. Positive contributors to relative performance during April included Telix Pharmaceuticals (+47.1%), Impedimed (+76.2%), 4D Medical (+165.0%) and NIB Holdings (+9.5%).
Negative contributors to relative performance during the month included not held positions in Blackmores, Corporate Travel and Strike Energy, and our holding in PEXA (-1.6%).
Performance Commentary - March 31, 2023 During the month portfolio holding Janison announced that it had successfully delivered the nationwide NAPLAN (“National Assessment Program – Literacy & Numeracy) assessment. The assessment was delivered fully online across 9,300 participating primary and high schools across Australia. Janison has developed the online assessment platform for NAPLAN over the last seven years in partnership with Education Services Australia and Microsoft.
Janison’s platform delivered 4.4 million tests for 1.3 million students over a week. In a peak day, Janison delivered over 1 million tests and 0.3 million students sitting the exam simultaneously on Janison’s platform without issue. Janison also announced that it had been awarded a global agreement with Oxford University Press (“OUP”) to develop and deliver a range of new and existing assessment products globally. This follows the announcement last year that it had entered into a global partnership with Cambridge University Press & Assessment. OUP is the education publishing arm of Oxford University.
The products will be rolled out from 2024 and include tests for years 6 and 9 globally and using the same core Janison technology that has delivered NAPLAN.
Performance Commentary - February 28, 2023 The benchmark fell 3.7% during February and gave back some of its gains from January as interest rate expectations increased following better than expected economic data. The fund was down 0.9% after fees, outperforming the benchmark by 2.8%. It is now over 5 years since inception of the Trust and over this time the Trust has delivered a +7.6% p.a. return net of fees, outperforming the benchmark by 4.1% p.a. Positive contributors to relative performance this month included AUB Group (+17.4%), Steadfast Group (+11.3%), Alpha HPA (+17.6%), Smartgroup (+13.1%) and Sims (+4.7%). The key negative contributors to relative performance this month were Immutep (-18.6%), Integral Diagnostics (-14.1%) and Pexa Group (-2.5%).
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