November, 2020
The Fund outperformed its benchmark over the month of November.
Contributors
Overweight Qantas (QAN) Travel stocks responded to expectations of further domestic reopening, which saw our key position Qantas (QAN, +28.4%) outperform. With the national airliner set to ramp up domestic capacity in the near-term, and we see more upside from its current price levels.
Not Held Woolworths (WOW)
Supermarket giant Woolworths (WOW, -3.1%) pulled back amongst the market defensives as investors turned risk-on over the month. This is in spite of the company reporting a good set of sales numbers for 1Q21. We do not hold WOW and this helped on the portfolio’s relative performance. We retain exposure to the supermarket sector via the position in Metcash and its IGA franchise. This provides exposure to a defensive earnings stream, coupled with company-specific factors such as improvements in market share on the back of improved store formats and an increase in neighbourhood-style convenience shopping.
Detractors
Overweight Saracen Minerals (SAR) Gold continues to sell-off amid the rise of the long-term bond yields, as investor’s need for safe haven reduces for now. This saw gold miners, including Saracen Minerals (SAR, -16.5%) pull back during the month.
Underweight NAB (NAB)
The big four banks all performed strongly during November, ranging from +14.3% (WBC) to +24.8% (NAB), as their latest updates got well received by the market. The outlook remains unconvincing - revenue trends remain challenged, credit growth - while stabilising - is still low, margins remain under pressure and any tangible benefit from cost out is an FY22 story. However, they remain propped up by the likelihood of lower bad and doubtful debts (BDDs), which supports the capital position and headline earnings, bolstering the dividend yield. Without BDD deterioration it is hard to see the sector underperform materially. We still prefer ANZ and WBC over NAB and CBA.
ticker: RFA0103AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://investmentcentre.moneymanagement.com.au/factsheets/mi/ltf0/pendal-wholesale-imputation
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asset_class: Domestic Equity
asset_category: Australia Large Blend - Income Dividend Focused
peer_benchmark: Domestic Equity - Large Cap Dividend Index
broad_market_index: ASX Index 200 Index
structure: Managed Fund
manager_contact_details: Array
fund_features:
The Fund aims to provide a return (before fees, costs and taxes) that exceeds the S&P/ASX 300 (TR) Index over the medium to long term. It is designed for investors who want the potential for long term capital growth and tax effective income, diversification across a broad range of Australian companies and industries and are prepared to accept higher variability of returns. The Fund will primarily invest in Australian shares, including Australian listed property securities and convertible preference shares, that offer above average income returns. The Fund may also hold cash and may use derivatives. Pendal’s investment process for Australian shares is based on our core investment style and aims to add value through active stock selection and fundamental company research. Pendal’s core investment style is to select stocks based on our assessment of their long term worth and ability to outperform the market, without being restricted by a growth or value bias. Our fundamental company research focuses on valuation, franchise, management quality and risk factors (both financial and non-financial risk). 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.