Bell Potter LIC Weekly: ESG integration, dispersion and performance

Pengana International Equities Limited (ASX:PIA)is a LIC with the objective to provide shareholders with capital growth from investments in an ethically screened and actively managed portfolio of global businesses, with the provision of regular and reliable fully franked dividends. Companies considered for inclusion within the investment portfolio will typically exhibit large and accretive FCF generation, compelling valuations, low leverage and compliance with internal ESG requirements. The strategy aims to generate consistent long-term returns whilst reducing volatility and the risk of permanent capital loss. We calculate a total shareholder return of 14.3% over the past year, compared to a pre-tax NTA return of 8.3%, which has aided in a significant reduction of the discount. Meanwhile the average total shareholder return and pre-tax NTA return across global equity mandates was 2.1% and 1.7%, respectively. In accordance with Pengana’s responsible investment process, a negative screening process initially seeks to avoid investable companies that derive operating revenues from direct and material business involvement in predefined sectors. Involvement in these screened activities is assessed by reference to reports sourced from Sustainalytics, an independent provider of ESG and corporate governance research and ratings (continued in report).