The Pengana International Fund - Ethical Opportunity aims to invest in a portfolio of global companies, diversified across geographies, industries and company sizes.
The Fund is long-only, benchmark independent and typically holds 30-50 companies. The mandate allows investment across geographies, industries and company sizes. The companies considered for inclusion in the portfolio demonstrate large and growing free cash flow generation, and are priced attractively relative to their cash flow.
The portfolio is created from the 30-50 stock ideas that work best together, rather than just the 30-50 best ideas.
The Fund utilises a negative screening process which seeks to avoid investment in companies that derive operating revenues from direct and material business involvement in the following:
- Adult content
- Animal cruelty
- Fossil fuels (coal, coal seam gas, oil)
- Genetically modified organisms (GMO)
- Human rights abuses and exploitation
- Old growth forest logging
- Securities from issuers on UN sanctions list
- Uranium mining
Integration of ESG factors into the research process directs investments to well-managed, responsible and progressive companies.
The investment team develops an understanding of the opportunities using detailed research covering financial statements, company meetings and external research. Companies that meet the investment criteria are divided into three segments:
Core (60-80%): are stable and growing businesses that generate consistent returns.
Cyclical (0-30%): businesses operating in cyclical industries that are posed for a cyclical upturn, which is not recognised in the share price.
Opportunistic (0-20%): are unique, company specific situations that offer attractive potential upside.
This Fund is currently closed to new investors, however existing investors can make additional payments or redeem their investment as per normal.
Benefits of investing
Skilled investment team. The investment team has over 90 years of combined experience investing in international equities and has developed a successful and repeatable investment process.
A truly active fund. A relatively concentrated portfolio that is selected purely on investment merits rather than index weight.
Investment in high quality businesses at compelling valuations. The Fund aims to invest in businesses with compelling business models, that consistently generate large and growing sums of cash.
Focus on risk and return. The portfolio focuses on 30-50 stocks that work together, with sufficient concentration to deliver returns and sufficient diversification to reduce risk.
Investment approach that is suitable across market environments. The investment team invests across different geographies, industries and company sizes and can adjust to changing market environments.
Ethical process: Negative ethical screens exclude industries that, in our opinion, can cause harm to people, animals or the environment. Integration of ESG factors into the research process directs investments to well managed, responsible and progressive companies.