Pengana finds gems in emerging companies
Tuesday, 8 December 2009 11:15am
The Pengana Emerging Companies Fund is celebrating its fifth anniversary, and investors will be happy to know they have pocketed more than 15 per cent annualised net return for their investments.
Ed Prendergast, fund manager at Pengana, said a combination of hard-nosed research and putting a cap on the product's FUM have contributed to the fund's success.
"In the five years we've started, what we do hasn't changed a lot - we're pretty active in going out and finding companies, and finding the best among a very big lot," he said.
The fund holds between 50 and 60 stocks at any given time, and the portfolio managers' first port of call is to always meet with the companies to assess their positions in the portfolio.
"The key thing is valuing stocks with a bit of discipline, weeding out things [when] we have some trouble understanding their cash flow.
"Lastly, limiting the size of the fund is very important. We have very limited capacity in our fund, kept under $450 million," he said.
The end result is flexibility - with the management team nimble enough to look at the smallest of the small end of the market, and correct any mistakes in their portfolio quickly, said Prendergast.
So far the strategy appears to be working.
The fund has outperformed its respective benchmarks, beating the 1.8 per cent p.a. for the S&P/ASX Small Industrials Acc Index, 6 per cent p.a. for the S&P/ASX Small Ordinaries Acc Index and 8.8 per cent p.a. for the S&P/ASX 200 Acc Index over the same period.
The fund also recently won first place in the Mercer Wholesale MPA Australian Small Companies Survey over the five year period ending 31 October.
Ruth Liew
This story was found at: http://www.financialstandard.com.au/news/view/27512
Printed: Wednesday, 8 September 2010 7:21am