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 2024.
The Strategy1 delivered a return of -3.67% during the month, compared with the benchmark MSCI All Country World Index return of -2.75%. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over one, five and 10 years, and since inception.
Strategy Update
Global equity markets retreated in April following five straight months of gains. The primary catalyst for the pause in the markets’ advance was higher-than-expected March inflation data in the US. This dampened expectations in terms of both the timing and scale of interest rate reductions in the current year and pushed the US 10 Year treasury yield to its highest level since late 2023. The higher treasury yields put pressure on the valuation of the equity market, particularly the higher price-to-earnings multiple growth sectors. In terms of individual sectors, the top performers included Utilities and Energy while Technology and Real Estate lagged. China was one of a handful of markets to advance during the month and was the main contributor to the outperformance of emerging markets relative to developed markets. At a style factor level, value which benefited from rising energy prices and its lower sensitivity to interest rates, outperformed growth.
Stock selection was the primary contributor to the strategy’s underperformance in April. The three sectors where this was most evident were Financials, Consumer Discretionary and Materials. On the plus side, stock selection in the Health Care and Industrials sleeves of the portfolio added to relative performance. From a sector allocation perspective, the largest positive contributions came from the zero allocation to Real Estate and the overweight positions in Industrials and Financials. The three largest detractors from relative performance in terms of sectors were the below benchmark exposures to Energy, Consumer Staples and Communication Services.
The WCM investment team’s focus on expanding moat businesses with aligned corporate cultures means the Strategy typically has an overweight exposure to the Technology and Health Care sectors. Recent portfolio addition, Illumina Inc, is a rare breed crossover of these two sectors. Illumina dominates the next-generation sequencing space. The firm develops, manufactures and markets integrated systems for the analysis of genetic variation and biological function. The company’s moat comes from its unmatched scale, huge installed base, strategic partnerships and industry leading research and development. This moat is poised to expand along with the growing uses for genetic sequencing including diagnostics. Under its new leadership, Illumina is in the early stages of a cultural turnaround having gained strategic clarity and operational focus.
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 (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.
