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| Fund Overview | Following a review, Pengana Capital Limited have decided to change the investment team for the Pengana Australian Equities Market Neutral Fund. The new investment team will continue to manage the Fund in accordance with the Fund's current investment objectives. We expect to be able to advise the details of the new investment team within the next 2 to 3 weeks. Investors will not be exposed to investment performance risk during the transitionary phase. The assets of the Fund will be liquidated into cash pending the appointment of the new investment team. Following the appointment of the new investment team, the cash will then be reinvested into equities. Pengana Capital will issue an updated Product Disclosure Statement when the new investment team is formally appointed which we estimate to be in 2 to 3 weeks. There will be no change to the product features other than the investment team change and we envisage only minor refinements to the investment process and investment guidelines of the Fund, which will be disclosed in an updated Product Disclosure Statement. The Fund's Product Disclosure Statement has been withdrawn and, until the updated Product Disclosure Statement is issued, the Fund is closed to all applications. Any application requests received after 2pm on Thursday 15 January 2015 will not be processed and will be returned with all application monies. Withdrawals will continue to be processed as normal and payment made in accordance with instructions. Existing investors do not need to take any action at this time. We will advise them once the new investment team is appointed and the updated Product Disclosure Statement is issued. Should you require any further information at this time, please contact your Financial Adviser or Pengana's Client Services team: Phone: 02 8524 9900 Email: clientservice@pengana.com |
| Manager Comments | Value was the worst performing factor over the quarter followed by Momentum, Quality and Revisions. Falling risk appetite continued to gather momentum over the quarter and was accentuated by falling market volatility and trade volumes over December. The fund benefitted from its short position in the iron ore exposed names of Arrium and Mount Gibson and its net short to the energy sector with Santos and AWE in particular adding value, however the long exposure to Lonestar Energy detracted value from the portfolio. The net short to mining services companies detracted value for the quarter in spite of their deteriorating outlook as miners and now oil and gas companies look to lower CAPEX budgets. Sharp falls, followed by strong rallies from the likes RCR Tomlinson and Skilled group were examples of a sector where performance was highly variable and volatile. The Consumer discretionary sector was a poor performer with the fund exposed to both Flight centre and STW communications at the time of both their profit downgrades. The model has identified Harvey Norman, Nine Entertainment and Dick Smith as core long positions representing both value and positive earnings momentum within the consumer sector. Peet is one of the fund's top holdings as it trades at a 13% discount to NTA, is exposed to the improving development market in Queensland and delivered solid margin expansion and EPS growth in FY14. It screens positively across most of our metrics especially within the property sector. Paladin energy now screens very poorly across all our Valuation and Quality metrics and is one of the largest short positions in the fund. |
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