14 Jan

Shareholders Quarterly Report - December 2021

E CP E MERGING GROWTH LIMITED SHAREHOLDERS ’ QUARTERLY REPORT DEC EMBER 2 02 1 OBJECTIVE Long - term capital growth and income STRATEGY High - conviction portfolio of quality Australian listed small to mid - cap companies constructed using a research driven, bottom - up investment philosophy DIVIDEND INFORMATION (Cents per share, fully franked) 2.75 cps on 15 September 2 021 2 .0 0 cps on 12 March 202 1 2.25 cps on 18 September 2020 1.75 cps on 20 March 2020 COUNTRY WHERE LISTED Australian Securities Exchange: Inception 14 August 2014 STOCK EXCHANGE CODE ASX : ECP RATINGS • Independent Investment Research – Recommended 1 DIRECTORS Murray d’Almeida Non - Executive Chairman David Crombie AM Non - Executive Jared Pohl Executive COMPANY SECRETARY Scott Barrett COMPANY DETAILS ECP Emerging Growth Limited ACN 167 689 821 Suite 305, Level 3 343 George Street Sydney NSW 2000 AUSTRALIA Tel: 1800 352 474 Fax: +61 2 8651 6899 Email: info@ecpam.com ecpam.com/emerging PORTFOLIO PERFORMANC E 3 m 1 Y 3 Y 5 Y INCEPTION ECP Portfolio^ - 4. 9 % 1 6. 9 % 33.8 % 2 3 . 4 % 19.1 % ASX All Ordinaries Index 2.0 % 13. 6 % 10. 9 % 6. 4 % 4. 5 % ^ Source: ECP Asset Management. Gross performance before impact of fees, taxes and charges. Past performance no predictor of future returns. ECP Emerging Growth Limited ’s Net Tangible Asset Value (NTA) as at 3 1 December 2021 (before estimated tax on unrealised gains) clos ed at 18 0 . 2 cents per share , this represents a decrease of 4.6 % on the prior quarter . This under - performance of the portfolio is due to our high PE growth stocks coming under pressure in an environment of rising inflation and increased interest rates . INVESTMENT ACTIVITY During the quarter, we added GQG Partners (ASX: GQG), Judo (ASX: JDO) and Nanosonics (ASX: NAN). GQG and JDO were IPO’s we participated in and which exhibit high - quality characteristics with strong growth profiles. We removed ARB Corp (ASX: ARB), Magellan F in ancial Group (ASX: MFG), Pendal Group (ASX: PDL) and Resmed (ASX: RMD). GQG remains in the growth phase of its lifecycle as it continues to deepen global distribution , while MFG and PDL have been removed due to lower conviction surrounding the ir business models and future growth prospects . ARB was sold due to valuation concerns while Resmed, after inclusion in the ASX/S&P50 Index, had to be removed from the portfolio . MARKET COMMENTARY By year end, global equities were stronger as investors focused on economic resilience and corporate earnings, despite the ongoing volatility caused by Covid - 19 . The rising Covid case numbers seemed to become less of a concern for investors as the new variants seem to result in less severe symptoms . Across the world, service - based sectors appear to be losing their positive momentum, while manufacturing sentiment has continued to remain resilient despite supply constraints and rising input prices . The strength in corporate e arnings outlooks, combined with easing supply chain pressures have seen investors remain positive as we head into the new year where monetary policy normalization and inflation issues are becoming of central importance. In the US, b y quarter - end, equities posted robust gains as the economy remained stable with unemployment falling to 4.2% and corporate earnings remained robust . Bond markets have priced for monetary policy normalization , with short - dated bond yields rising more than their longer - dated count erparts indicating concerns regarding resilience to interest rate rises and sustained inflation . The S&P500 posted +10.6% while the Nasdaq posted +8.3%, by quarter - end. In Australia, investors have been acutely focused on the policy settings by the Reserv e Bank of Australia (RBA) with growth related sectors underperforming . The RBA made no changes to monetary policy during the quarter; however, they have indicated a re - evaluation in February . The RBA noted improvements in the economy, with unemployment f alling to 4.6% while housing prices appear to be moderating . The ASX All Ordinaries posted +2.0% for the quarter, ASX 200 +1.5%, the Midcap 50 +5.5% and the Small Ordinaries was +1.6%, respectively . The AUD appreciated during the quarter, posting +0.6% a gainst the US Dollar (72.7 US cents), +0.1% against the Pound (53.7 pence), and +2.4% against the Euro (63.9 cents). PORTFOLIO CHARACTERISTICS (as at 3 1 Dec ember 20 21) NTA (Before tax on unreali s ed gains) – Total $ 3 3 , 01 6 , 897 NTA (Before tax on unreali s ed gains) – Per Share 1 80 . 2 cents Concentration of the Top 20 Holdings 8 7.2 % Number of Portfolio Positions 2 5 SHAREHOLDERS ’ QUARTERLY REPORT ECP ASSET MANAGEMENT ABN 68 158 827 582 Our Investment Philosophy is based on the belief the economics of a business drives long - term investment returns. This is expressed through our investment process . ? Valuing potential, not just performance ? Choosing high - quality growing businesses ? Ignoring temporary market turbulence E CP E MERGING GROWTH LIMITED D E C EMBER 2 0 2 1 PORTFOLIO BREAKDOWN SECTOR ALLOCATION TOP HOLDINGS Financials 26.7 % GQG Partners 7. 8 % Information Technology 26.3 % HUB24 Ltd 6.7 % Consumer Discretionary 25.4 % Netwealth Group 6. 7 % Telecommunications 8. 8 % PWR Holdings Limited 6.6 % Cash 7 . 2 % Megaport Limited 6.3 % Consumer Staples 3.6 % Lovisa Holdings Ltd 6.1 % Health Care 2.0 % Carlales.com 5.1 % Industrials 0.0% Altium Limited 4.8 % ACTIVE SECTOR WEIGHTS vs. ALL ORDINARIES QUARTERLY PORTFOLIO CHANGES ADDITIONS GQG Partners GQG Judo Cap Holdings JDO Nanosonics Limited NAN REMOVALS ARB Corporation ARB Magellan Financial Group Ltd MFG Pendal Group Ltd PDL ResMed RMD ACTIVELY PROMOTING THE COMPANY During the quarter, the Company’s Investment Manager participated in two webinars focusing on the need to rethink the prevailing descriptions of growth versus value investment styles. The webinars were designed as investment education sessions and feature d both theoretical and practical applications of the topic. One webinar was hosted by the I nvestment M anager’s distribution partner, Copia Investment Partners, while the other was hosted by an Australian financial planning group, in concert with Copia. A n article discussing the webinar topic “Value versus growth – a conversation that is out of style” can be downloaded from the I nvestment M anager’s website. ECP Emerging Growth Limited is committed to growing the Company and promoting itself to I nv estors , F inancial A dvisers, S tockbrokers and I n vestor A ssociations across Australia. Please contact the Company for further information through info@ecpam.com or visit our website www.ecpam.com/emerging for links to Shareholder Reports and Announcements . Subscribe here to our latest updates STRUCTURE AND TERMS Dividend Reinvestment Plan Dividend Reinvestment Plan (DRP) is an optional way of reinvesting dividends to acquire additional shares. When new shares are issued under the DRP, they are free of brokerage, commission, stamp duty and other costs. Legal Domicile Australian Securities Exchange (ASX) Listed Investment Company (LIC) Fees Management Fee of 1.0% p.a. Performance Fee 20% of the annual outperformance over 8.0%. MER 2 1 .11 % Reporting and Correspondence Monthly Net Tangible Asset Values www.asx.com.au and Quarterly Reports , Half - Yearly and Annual Reports on www. ecpam.com/emerging Auditor Connect National Audit Pty Ltd Registry Boardroom Pty Limited - 1300 737 760 OR enquiries@boardroomlimited.com.au Share price and NTA www.asx.com.au and www. ecpam.com/emerging 1 Th ese opinion s are provided by i ndependent r esearch e r s and must be read together with the whole report including the disclaimer and relevant legal notices which can be found at the respective websites. 2 Calculated in accordance with ASX defined terms as at 30 June 20 2 1 -30% -20% -10% 0% 10% 20% 30% I.T. Cons Discret Telcos' Financials Cons Staples Utilities Energy Industrials Real Estate Health Care Materials
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