Pengana’s High Conviction Equities Fund has staged a remarkable recovery after a challenging start to the year. After being crowned Australia’s top-performing investment strategy last year with a 109 per cent return, the fund experienced a 33 per cent slump in the first quarter. Portfolio manager James McDonald attributed the downturn to a “perfect storm” of events, including the collapse of Opthea and broader market volatility. Pengana Capital Group is an Australian-based funds management group. Pengana offers a range of investment strategies to both institutional and retail investors.
However, McDonald and co-portfolio manager Jeremy Bendeich have steered the $135.2 million fund back on course, achieving a 54.2 per cent return in the three months to July. This turnaround was largely driven by strategic investments in critical minerals and healthcare stocks. The fund benefited from China’s ban on rare earth exports, which boosted the value of its stake in Metallium. Similarly, its largest position in IperionX, a developer of low-cost titanium, has nearly tripled in value over the past year.
McDonald highlighted the favourable conditions for critical mineral stocks, noting the global scramble for resources as countries seek to diversify supply chains. The fund has also capitalised on its expertise in the biotech sector, with investments in Clarity Pharmaceuticals and Artrya contributing to its strong performance. American biotech CalciMedica, one of the fund’s few international holdings, also saw its value more than double in July.
The High Conviction Fund’s resurgence has led to a significant increase in funds under management, growing from $60 million in July last year to nearly $140 million. With a focus on small to mid-cap companies, the fund aims to reach $200 million in assets while maintaining its strategy of investing in high-potential growth opportunities.
