We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in March 2025.
The Strategy1 delivered a return of -6.08% during the month, compared with the benchmark MSCI All Country World Index return of -4.10%. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over one, three, five and 10 years, and since inception.
Strategy Update
Uncertainty surrounding the Trump administration’s forthcoming reciprocal tariff policies continued to weigh on global equity markets in March. While details of these tariffs weren’t announced until ‘Liberation Day’ on 2 April, economists had warned that they would inevitably lead to higher inflation and lower global economic growth. This combination is seen as a double negative for equity markets as higher inflation acts as a drag on valuations and slower growth reduces corporate earnings. Regionally, the trends from the beginning of the year continued in March with US equities again underperforming other developed markets and China leading the relatively stronger performance of emerging markets. At a factor level, fluctuations in market sentiment meant another month of outperformance of value versus growth.
The scale of tariff rates when subsequently announced on 2 April far surpassed the market’s expectations.
The scale, plus the uncertainty of how long these tariff rates would stay in place and the responses of the US’ trading partners to them, triggered a sharp fall in equity markets in early April. While markets are expected to remain volatile in the medium term, the WCM investment team remains committed to the process and philosophy that has seen the WCM Quality Global Growth Strategy (Strategy) consistently outperform its benchmark. This process is focused on identifying businesses that are expanding their competitive advantages supported by strong, adaptable and well-aligned corporate cultures.
Stock selection within the information technology, healthcare and financials sleeves of the portfolio was the main contributor to the portfolio’s underperformance in March. The performance of these sectors more than offset the positive contribution from the portfolio’s communication services and industrials holdings. In terms of sector allocations, the largest positive and negative contributions came from the overweight exposure to healthcare and underweight to energy, respectively. Regionally, the portfolio benefited from the less than benchmark exposure to the US and overweight bias to Europe. Germany based Heidelberg Materials is one of the new European names added to the portfolio during the March quarter. It is a global leader in the building materials industry, specialising in cement, aggregates and ready mixed concrete used to build highways, bridges and urban developments. Heidelberg is well positioned to benefit from a recovery in the European cement sector as over 40% of the firm’s earnings are from Europe of which 10% is from Germany. Despite historically low cement volumes in Europe, growth opportunities are emerging, particularly from Germany’s recently announced 500bn Euro infrastructure plan and the reconstruction efforts in Ukraine.
One of the standout features of the first quarter was the reversal of some previously well-established market trends such as the outperformance of US equities, particularly the so called Magnificent 7. The Strategy was well positioned for this as its exposure to both US equities and the Magnificent 7 is less than that of the market benchmark. The portfolio also benefited from its exposure to several idiosyncratic themes including aerospace and defence. The strongest headwind the portfolio faced was the very strong relative performance of value stocks compared with growth. As in previous periods of heightened volatility, indiscriminate market selling of high-quality businesses will likely present opportunities for the team to enhance the portfolio further.
Notes: 1. WQG, WCMQ and WCM Quality Global Growth Fund (Managed Fund) have the same Portfolio Managers and investment team, the same investment principles, philosophy, strategy and execution of approach as those used for the WCM Quality Global Growth Strategy however, it should be noted that due to certain factors including, but not limited to, differences in cash flows, management and performance fees, expenses, performance calculation methods, and portfolio sizes and composition, there may be variances between the investment returns demonstrated by each of these portfolios and the WCM Quality Global Growth Strategy Composite (the Composite) in the future. As WQG, WCMQ and WCM Quality Global Growth Fund (Managed Fund) have only been in operation for a relatively short period of time, this table makes reference to the Composite to provide a better understanding of how the team has managed this strategy over a longer period. Performance is net of fees and includes the reinvestment of dividends and income. 2. Composite inception date is 31 March 2008. 3. Benchmark refers to the MSCI All Country World Index (with gross dividends reinvested reported in Australian Dollars and unhedged). 4. Value Added equals Composite Performance minus Benchmark performance. 5. Annualised.
DISCLAIMER: AGP Investment Management Limited (AGP IM) (ABN 26 123 611 978, AFSL 312247) is a wholly owned subsidiary of Associate Global Partners Limited (AGP) (ABN 56 080 277 998), a financial institution listed on the ASX (APL). AGP IM has prepared this material for general information purposes only for WCM Global Growth Limited, a listed investment company (ASX: WQG).
AGP IM is the responsible entity for WCM Quality Global Growth Fund - Active ETF (ARSN 625 955 240) (ASX: WCMQ) and WCM Quality Global Growth Fund (Managed Fund) (ARSN 630 062 047).
AGP International Management Pty Ltd (AIML) (ABN 33 617 319 123) is the investment manager for WQG and is an authorised representative of AGP IM. WCM Investment Management, LLC (WCM) is the underlying manager and applies its WCM Quality Global Growth Equity Strategy (the Strategy), excluding Australia, in managing each of WQG, WCMQ and WCM Quality Global Growth Fund (Managed Fund)(the Funds). WCM does not hold an AFSL. WQG and AIML are part of the AGP Group.
Any references to ‘We’, ‘Our’, ‘Us’, or the ‘Team’ used in the context of the portfolio commentary, is in reference to WCM Investment Management, as investment manager for the Strategy or AIML as investment manager for WQG.
Even though the Strategy, excluding Australia, is applied to each of WQG, WCMQ and WCM Quality Global Growth Fund (Managed Fund) certain factors including, but not limited to, differences in cash flows, fees, expenses, performance calculation methods, portfolio sizes and composition may result in variances between the investment returns for each portfolio. The performance of the Strategy is not the performance of the portfolios and is not an indication of how WQG, WCMQ and WCM Quality Global Growth Fund (Managed Fund) would have performed in the past or will perform in the future.
The material should not be viewed as a solicitation or offer of advice or services by WCM, AGP or AGP IM. It does not contain investment recommendations nor provide investment advice. It does not take into account the objectives, financial situation or needs of any particular individual. Investors should, before acting on this material, consider the appropriateness of the material.
Neither AGP IM, AGP, their related bodies corporate, entities, directors or officers guarantees the performance of, or the timing or amount of repayment of capital or income invested in the Funds or that the Funds will achieve its investment objectives. Past performance is not indicative of future performance.
Any economic or market forecasts are not guaranteed. Any references to particular securities or sectors are for illustrative purposes only and are as at the date of publication of this material. This is not a recommendation in relation to any named securities or sectors and no warranty or guarantee is provided that the positions will remain within the portfolio of the funds. Any securities identified and described are for illustrative purposes only and do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable.
Investors should seek professional investment, financial or other advice to assist the investor determine the individual tolerance to risk and needs to attain a particular return on investment. In no way should the investor rely on information contained in this material.
Investors should read the Product Disclosure Statements (PDS) of the Funds or any relevant offer document in full before making a decision to invest in these products.
