We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in December 2021.
The Strategy1 delivered a return of -0.14% during the month. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over six months, 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)
Global equity markets were higher in December, completing a third consecutive year of double-digit positive returns. Overall, for the calendar year, the portfolio achieved a return of 21.29%.
December saw a continuation of the long-running arm wrestle between the positive forces of expansionary fiscal and monetary policy plus vaccine rollouts, versus the negative impact of lockdowns on economic activity and inflation. Fears over the highly infectious COVID-19 Omicron variant, which first surfaced in November, gave way to relief when it was recognised as being much less virulent than its predecessors. The other major newsworthy event in the month was the US Federal Reserve giving notice of a sooner-than-expected reduction in its bond purchasing programme, thus paving the way for higher interest rates in 2022. Other central banks also signalled a tightening in policy with the Bank of England increasing rates by 0.15% to 0.25%.
At a regional level, developed markets outperformed emerging markets, with the latter weighed down by China’s continuing efforts to manage its property and debt problems. In terms of sectors, gains were widespread with Utilities and Consumer Staples leading the way. At a factor level, value and momentum factors were among the stronger performers.
From a sector allocation perspective, the portfolio’s zero exposure to Utilities and Real Estate and overweight position to Consumer Discretionary stocks was a drag on performance in December. The largest positive sector-based contribution to the portfolio came from the overweight exposure to Health Care. Stock selection detracted from performance in December.
The portfolio’s Health Care exposure includes Massachusetts-based Repligen Corporation, a ’picks-and-shovel’ play on bioprocessing. Repligen makes critical instruments and consumables that are used in key parts of the drug manufacturing processes of pharmaceutical companies. Their economic moat is twofold: high-switching costs and deep industry know-how. Repligen uses this strong position to expand its moat through the thoughtful acquisition of adjacent technologies. The business is further supported by the tailwinds of growing demand for biologics and expanding biomanufacturing capacity.
Looking ahead to 2022 there is, as always, plenty of uncertainty. However, regardless of what the year brings from a macroeconomic or markets perspective, the WCM team will remain focused on businesses that are continuing to grow their competitive advantages. These are the companies most likely to deliver compelling returns in the long run.
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.