Pengana Private Equity Trust – “Shut Up and Take My Money”

Rodney Lay

Risk Return Metrics

PE1 has not only done everything right to date, it has also exceeded all expectations. And there is a multiplicity of reasons for this, as detailed in the report. In these volatile markets, think about this: outperformance, less downside equities market capture, low whole-of-portfolio correlation benefits, and a strategy recording increasingly strong returns.

"Proof is in the performance pudding"

  • Source: RRM, Pengana Capital

Top up &/or buy with your ears pinned back

  • PE1 is an exceptionally well-conceived and, so far, well-executed private equity strategy managed by an investment manager with a particularly strong track record, as discussed below.
  • The very compressed J-curve performance (as evident by the NAV timeline of PE1) is highly suggestive, in addition to all capital now being fully committed as well as the majority of the portfolio being invested in private equity, that the hard work is now done. We expect a solid and relatively stable growth profile moving forward.
  • Private equity, specifically its middle-market segment, historically exhibits low correlations to equities markets, particularly in down equities markets. RRM considers PE1 a comparative safe-haven or whole-of-portfolio risk-mitigant.
  • PE1 is a unique investment vehicle in Australia based on its liquidity and portfolio exposure. Assuming retail investors want the option of liquidity, a private equity vehicle can only be offered via a closed-ended investment vehicle (i.e., a LIC/LIT).
  • The proof is in the performance pudding. In our view, PE1’s performance to date has surprised on the upside. And by this, we partly mean the very compressed J-curve by private equity standards. This only reinforces our conviction in the investment manager and showed an ability to capitalise on the market dislocation event in 2020. This is always a strong positive sign.
  • Capital has been judiciously raised by Pengana, mitigating any potential risk of there being excess supply relative to the demand for PE1 stock. That is, mitigating discount to NAV risk. We see evidence of this in PE1’s very solid unit price to NAV performance.
  • Finally, in our view, a very suitable long-term, ‘put it in the draw’ investment with high ‘sleep easy at night’ attributes.

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Rodney Lay
Rodney Lay
Risk Return Metrics

Investment analyst with particular experience in listed and unlisted investment strategies, equities and structured products.

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