We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in August 2021.

The Strategy¹ delivered a return of 2.89% during the month. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over six months, twelve months, three years, five years, ten 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)

Strategy Update

Global equity markets chalked up their seventh consecutive monthly gain in August, with several major indices hitting multiple new all-time highs. The seven-month winning streak for European equities is the first time this has been achieved since the end of financial crisis in 2012. While COVID-19 infections linked to the Delta variant continue to rise across the globe, rising vaccination rates are allowing most major economies to avoid the need to return to economically crippling lockdowns. Economic data continues to show strong growth although some leading indicators, such as the purchasing managers’ indices, suggest the rate of this growth may be close to peaking.

With another (relatively) high inflation report in the US, markets took comfort from Federal Reserve Chairman, Jerome Powell’s speech at Jackson Hole, in which he suggested the spike in the consumer price index is likely to be temporary. As such, the market’s expectation is that a tapering of the Federal Reserve’s bond purchasing program will remain on hold until closer to year end. At a regional level, there was little difference between the returns of developed and emerging markets, the latter recovering from another China regulatory related scare earlier in the month. Performance dispersion was also limited at a sector level, with Materials the only sector posting a negative return. Factor performance varied by region. Growth and quality outperformed in Europe while value measures were favoured in the US and emerging markets.

Portfolio relative performance during the month was helped by the overweight exposure to Technology and underweight position in Energy. Sector allocations detracting from performance included Consumer Discretionary (overweight in the portfolio relative to the benchmark) and the underweight position in Financials. Stock selection was positive in the Healthcare and Financials sectors, but a drag on performance in Technology and Consumer Staples.

Entegris, Inc. is an American provider of products and systems that purify, protect, and transport critical materials used in the semiconductor device fabrication process. The business is leveraging its superior technology, reputation and brand as well as its very sticky relationships with customers to expand its moat. Tailwinds include the growing complexity of semiconductor manufacturing that requires additional layers of materials.

Investment process is a key focus for capital allocators and researchers when forming a view on prospective money managers for their clients. A lot of this research focuses on the process money managers follow for identifying new investment opportunities. However, an equally important factor which often gets overlooked is the manager’s sell discipline. WCM’s process, based on investing in companies with expanding economic moats with cultures aligned to their moat trajectory, is applied as both a buy and sell discipline. If the investment team can no longer make a case that a company’s moat is still expanding, it is sold regardless of recent performance or valuation. Positions can also be sold if the team identifies a more attractive opportunity than an existing one, or the investment thesis has played out and the valuation is no longer considered attractive to its long-term growth potential. A recent example of the former was the sale of Cooper Industries in favour of WuXi Biologics; and an example of the latter was the sale of Boston Scientific Corporation.