Financials boost Aussie equity performance at Pengana
Financial stocks NAB and CBA generated strong performance for the Pengana Australian Equity fund last month.
The performance of the two banks led to the fund generating a 2.7% return during October and Pengana had taken profit from both stocks following their positive performance.
Other main positive contributors were Aristocrat Leisure, Super Retail Group, and Accent Group.
The market performance in October was primarily driven by the financials sector, which comprised over a quarter (25.9%) of the fund, followed by healthcare (14.7%) with investments in CSL and ResMed. Cash holdings had seen a gradual rise to finish the month at 13.3%.
Overall revisions, however, were mostly skewed to the downside.
The share price of CBA stocks was up by 3.1% rise in the year to date, up 6.5% in the past month to 21 November. Meanwhile, NAB stocks have been on a downward trend recently, losing 2.3% this past month but were up 4.2% in the year to date.
This compared to the ASX 200 which was down 5.7% since the start of the year.
Other top holdings in the fund include BHP, NIB, Telstra, and Woolworths.
Investor sentiment continued to hinge on factors such as inflation and rising rates, as well as rising cost pressures in terms of labour rates and shortages. While yet to take full effect on October trading, they were likely to show a more substantial impact on earnings to come in the first quarter of 2023, the firm said.
Notably, high freight and energy costs along with a weak Australian dolllar have been key drivers of downgrades to forward estimates.
“Importantly while consumer surveys continue to show a decline in consumer confidence, discretionary spending data points remain intact. Our base working assumption is that the ‘gravity’ of higher interest rates and cost of living expenses will materialise early in the new year,” read the fund’s October report.
AUTHOR
Rhea Nath
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