Conservative, pragmatic and style-agnostic: how to think about equities right now | Pendal Group
Hi there! Welcome to the new look Pendal website... Take a two minute tour to see what we’ve changed.

Mainstream Online Web Portal

Investors can view their accounts online via a secure web portal. After registering, you can access your account balances, periodical statements, tax statements, transaction histories and distribution statements / details.
Advisers will also have access to view their clients’ accounts online via the secure web portal.

Conservative, pragmatic and style-agnostic: how to think about equities right now

There’s no obvious default for equity investors in this kind of market says Pendal midcap portfolio manager BRENTON SAUNDERS. Research and stock-picking will make the difference

FEELING like there’s nowhere to hide in global markets? You’re not alone, says Pendal’s Brenton Saunders.

Higher energy prices from the Russian-Ukraine war are fuelling inflation. But just as policy-makers look to raise interest rates, growth is slowing in Europe and China, raising questions about the right policy response.

“There really is no obvious default for investors in this kind of market,” says Saunders, who manages Pendal MidCap Fund.

“With macro factors lurching around so quickly, it pays to have a very balanced portfolio.

“Things that once took a year to play out are happening inside of a quarter. If you have big macro tilts in your portfolio, you run a big risk of getting it wrong at some stage if you’re not nimble enough.”

Market drivers

Markets are caught between the impact of Russia’s Ukraine invasion and the ongoing effects of the pandemic, says Saunders.

The US is faced with an over-heating economy and very high inflation. But European growth is dragging as higher energy prices and the Russia-Ukraine conflict crimp growth. And China is slowing amid a resurgent pandemic.

This is causing market gyrations as investors try to take a read on the outlook.

“You’ve seen markets generally look overdone and come off the peaks,” says Saunders.

Find out about

Pendal 
Midcap Fund

“We’ve seen an extension of the de-rating of high-multiple, high-growth sectors. Then the most recent manifestation we’re now seeing is cyclical stocks like commodities getting impacted as well.”

Until recently commodities producers have been quite big beneficiaries of the “strange collusion of forces that is Covid and the Ukraine war”, says Saunders.

“It has all manifested quite positively for commodity players. But it’s starting to become less clear that it’s entirely positive for them.

“If you do have slowing growth, you’ll have low demand and that will manifest itself in commodity prices at some stage.”

Inflexion point for markets

Saunders says this inflexion is what the market is grappling with at the moment.

“The result is you’re seeing some fairly odd sector rotations — the market is too concerned about the growth stocks and high PE stocks to go back there just yet, especially the pre-profit growth stocks.

“But at the same time, there’s a realisation that the dream run we’ve had in commodities is at best having a consolidation period and at worst is showing signs of topping out.”

What’s the right path for investors?

Saunders says a sensible positioning is to stay conservative, pragmatic and style agnostic.

“We’re close to as conservatively positioned as we get.”

“It’s very much a stock picker’s market. It is really now about understanding a company’s specifics, spending time with a company. Even subtle differences in terms of exposures in cost and revenue bases can create quite different outcomes in quite similar looking companies.

“It is an environment where research and stock picking are making a difference.

“There’s no prizes for heroes in this market.”


About Brenton Saunders and Pendal MidCap Fund

Brenton is a portfolio manager with Pendal’s Australian equities team. He co-manages Pendal MidCap Fund and our natural resources portfolio, drawing on more than 25 years of expertise in resources, derivatives, investment banking and private equity. He is a member of the CFA Institute.

Pendal MidCap Fund features 40-60 Australian midcap shares. The fund leverages insights and experience gained from Pendal’s access to senior executives and directors at ASX-listed companies. Pendal operates one of Australia’s biggest Aussie equities teams under the experienced leadership of Crispin Murray.

Pendal is a global investment management business focused on delivering superior investment returns for our clients through active management. 

Find out more about Pendal MidCap Fund here

Contact a Pendal key account manager here


This information has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and is current as at May 5, 2022.

PFSL is the responsible entity and issuer of units in the Pendal Midcap Fund (Fund) ARSN: 130 466 581. A product disclosure statement (PDS) is available for the Fund and can be obtained by calling 1300 346 821 or visiting www.pendalgroup.com. The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo. You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund.

An investment in the Fund or any of the funds referred to in this web page is subject to investment risk, including possible delays in repayment of withdrawal proceeds and loss of income and principal invested.

This information is for general purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation.

The information may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information.

Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance.

Any projections are predictive only and should not be relied upon when making an investment decision or recommendation. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections.

For more information, please call Customer Relations on 1300 346 821 8am to 6pm (Sydney time) or visit our website www.pendalgroup.com

Keep updated
Sign up to receive the latest news and views