We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in April 2022.
The Strategy1 delivered a return of -4.92% during the month. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over three, five and 10 years and since inception.
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.
The Strategy is conveniently available via four investment structures to accommodate the differing preferences of individual investors. You can read the full investment update for each of these products on the links below:
- WCM Global Growth Limited (ASX:WQG)
- WCM Quality Global Growth Fund (Quoted Managed Fund) (ASX:WCMQ)
- WCM Quality Global Growth Fund (Managed Fund) (Unhedged)
- WCM Quality Global Growth Fund (Managed Fund) (Hedged)
The selloff in global equity markets gathered pace in April with many major indices entering correction territory i.e., a decline of more than 10% from the most recent peak levels. Inflation continues to be the primary concern for investors with the March US Consumer Price Index at 8.5%, its highest level since December 1981. The absence of any signs of resolution to the Ukraine invasion or ending of the COVID-19 lockdowns in China added to the bleak picture for equity market investors. In response to the deteriorating inflation outlook, markets are now pricing in 50 basis point increases at the next three Federal Reserve meetings. This combination of tightening monetary policy and rising inflation made it a challenging month for bond markets too, with US 10-year treasury yields ended the month close to 3%.
Within markets, there were very few places to hide with all major developed markets declining during the month. Emerging markets also suffered with only those heavily exposed to Energy and Commodity sectors posting a positive return. In overall terms for sectors, Consumer Staples and Energy stocks led the market, with Communication Services and Information Technology at the other end of the performance ladder. The portfolio’s performance was hampered by its overweight exposure to Information Technology and underweight position in Energy and Utilities. However, the zero allocation to Communication Services and overweight exposure to Health Care benefited the portfolio. At a factor level, it was another month during which value outperformed growth. The Australian dollar was weaker in April, providing a partial offset for unhedged global equity portfolios.
Snowflake Inc, a US-based cloud data warehouse firm, is a good, recent example of WCM’s investment philosophy in action. The continued migration of workloads to the public cloud and the sheer volume of data being collected and analysed provide powerful tailwinds for the business. Its moat comes from having a superior technology stack, strong network effects and high-switching costs. This moat is expanding as Snowflake adds more customers and new features such as data sharing. The combination of this expanding moat and strong culture, led by CEO Frank Slootman, make it an ideal fit for the Quality Global Growth portfolio.
The WCM investment team remains confident that the companies in which the portfolio is invested will continue to navigate this market uncertainty. This confidence comes from what WCM sees as its edge, i.e., the focus on owning positive economic moat trajectory businesses with strong and adaptable corporate cultures.
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 (Quoted Managed Fund) (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 CIML 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 CIML 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.