An equity market correction at this point in PE1's investment cycle should be advantageous to the portfolio across all time horizons
Although private equity has historically outperformed public equity during times of economic stress because of the long-term nature of the investments*, this outperformance is normally not immediately seen. PE1 is slightly different.
Due to the design of its portfolio and stage in the investment cycle, the increase in NAV during February’s market turmoil should not have been a surprise to our investors. In fact, if the market correction continues, the portfolio could continue to benefit in a number of ways:
Short term credit provides additional upside
Most of PE1’s cash is currently invested in investment grade liquid credit funds managed by PIMCO and TCW while waiting to fund investments in private equity. In times of stress, these credit assets may be expected to generate excess returns as interest rates adjust downwards. This was the case during the sell-off in February.
Further benefit from a falling AUD
The private market assets of the Trust are USD denominated. During times of turmoil in the markets the AUD tends to weaken relative to the USD. AUD weakness will generate further positive returns for PE1 unitholders. The longer the volatility lasts, the more AUD weakness we can expect as investors favour USD investments.
Increased investment opportunities
In the medium to long term, we believe that PE1 will benefit from this market disruption as PE1 (through Grosvenor and their private equity fund manager relationships) will have increased investment opportunities as well as lower acquisition prices. We have seen that Private Equity investments made in the aftermath of the GFC returned positively, in excess of its returns during the pre-GFC and GFC periods, and in excess of returns generated by public equity*.
Cheaper secondary investments
Market dislocations are likely to generate opportunities for PE1 to acquire funds on a secondary basis as existing fund holders look to adjust their allocations or become forced sellers of assets. Grosvenor have relationships with almost 500 primary fund managers and a team of 16 professionals dedicated to secondary investments who are ready to pounce on opportunities for PE1.
Public Markets are
JUST the tip of the iceberg
The Pengana Private Equity Trust provides:
Access
Direct exposure to oversubscribed and difficult-to-access middle market managers globally.
Income
A target cash distribution yield equal to 4% p.a. from 1 July 2020 payable semi-annually.4
Simplicity
A single point of entry to a well-diversified portfolio of private equity investments.
Private Equity has historically outperformed listed equity2
Across time periods
Across regions
Through different economic conditions
With less volatility
Latest Unit Price
$
ASX price delayed by 20 min.
Availability
ASX: PE1
Why there's a place for private equity in your portfolio
Introducing the Pengana Private Equity Trust
INVESTOR UPDATES
- 04/03/2020Monthly Performance Report – February 2020
- 04/03/2020NAV 29 February 2020
- 07/02/2020Monthly Performance Report – January 2020