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 2024.
The Strategy1 delivered a return of 0.20% during the month, outperforming the benchmark MSCI All Country World Index return of -1.28%. 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 overcame a volatile start to August before recording a positive return for the month. This early volatility was caused by the impact on so called ‘carry trades’ of the Bank of Japan’s decision to increase its policy rate. These carry trades relied on borrowing Yen at relatively low rates to finance the purchase of higher yielding assets. Some disappointing data related to US economic growth was a further source of negative market sentiment. By month end, however, investors’ focus had switched to the likelihood of imminent monetary policy easing by the US Federal Reserve and a positive quarter two earnings reporting season. Within equity markets, developed regions outperformed emerging. In terms of sectors, the strongest performances came from Health Care and Real Estate while at a factor level, there was little divergence between the returns of quality, growth and value.
Stock selection, with the largest contribution coming from holdings in the Information Technology, Industrials and Consumer Discretionary sectors, was the largest contributor to the Strategy’s outperformance in August. Sector selection also added to relative performance, helped in the main by the below Benchmark exposure to Energy and Information Technology and overweight position in Health Care. Individual stock price changes over the month lead to Astra Zeneca replacing UnitedHealth Group in the portfolio’s top 10 holdings.
Quality growth equity portfolios are typically heavily skewed towards sectors such as Information Technology, Communication Services and Consumer Discretionary sectors. While the Strategy has an overweight position relative to the market in the Consumer Discretionary sector, it has lower than market allocation to the other two sectors. However, many higher competitive advantage companies can be found across multiple sectors. An example of a sector that is not commonly well represented in quality growth portfolios is Industrials, in which sector the Strategy currently has its largest overweight position relative to the Benchmark.
Waste Connections is an example of an Industrial sector company currently held in the Strategy. The Canada-based firm is the third largest waste company in North America. Its competitive advantage (economic moat) is supported by its scarce and well-located landfill assets along with the benefits of growing route density. The expansion of this moat comes from penetrating new commercial and industrial accounts, leveraging its scale and acquiring subscale competitors. Waste Connections’ culture empowers its employees, providing training and leadership opportunities, which in turn leads to high employee engagement and low attrition, a rarity within the waste industry.
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.
