January, 2021
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.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Pendal-Active-Moderate-Fund-Factsheet.pdfasset_class: Multi-Asset
asset_category: 41-60% Growth Assets - Diversified
peer_benchmark: Multi-Asset - 41-60% Diversified Index
broad_market_index: Multi-Asset Balanced Investor Index
manager_contact_details: Array
ticker: BTA0487AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://www.pendalgroup.com/products/
fund_features:
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.
- Invests in Australian and international shares, Australian and international listed property securities, Australian and international fixed interest, cash and alternative investments.
- May also use derivatives.
- Has a similar weighting towards defensive assets as it does towards growth assets.
- Fund’s international share exposure will not be hedged to the Australian dollar.
- Derivatives may be used to reduce risk and can act as a hedge against adverse movements in a particular market and/or in the underlying assets.
- Derivatives can also be used to gain exposure to assets and markets.
structure: Managed Fund