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 2023.
The Strategy1 delivered a return of 2.03% during the month, outperforming the benchmark MSCI All Country World Index return of 1.87%. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over one month, one, 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 find the monthly investment update under ‘More Information’ 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 rallied strongly in December ending a calendar year which delivered returns of circa 22% in Australian dollar terms. The outlook for interest rates was once again the key driver for markets with investors responding positively to lower-than-expected November inflation numbers and the minutes from the Federal Open Market Committee’s latest policy meeting. These minutes indicated that policy members expect interest rates in the US to be circa 0.75% lower than current levels by the end of 2024. Separately, developed markets outperformed emerging in December, with the latter once again being held back by concerns over the Chinese Real Estate sector. At a sector level, Energy was one of the few to struggle with crude oil prices weaker despite output cuts from major producing countries. The stronger performing sectors included Real Estate, Industrials and Basic Materials. Factor performance was mixed during the month with small capitalisation companies a standout on the upside. The Australian dollar was stronger in December, reducing the returns for unhedged portfolios.
Sector selection was the primary positive driver of relative performance in December. The portfolio’s zero allocation to Energy was the biggest contributor to this, followed by the overweight exposure to Industrials and below Benchmark position in Consumer Staples. Sector allocations detracting from performance included the overweight positions in both Healthcare and Information Technology plus the absence of any Real Estate exposure. Stock selection in the Information Technology, Consumer Discretionary and Consumer Staples sleeves of the portfolio added to relative performance. In contrast, stock selection within sectors detracting from relative returns included Financials, Healthcare and Materials.
The combination of inflation coming down faster than expected and the resilience of the global economy in the face of higher interest rates were the key factors behind the strong performance of global equity markets in 2023. A year which began with major concerns over inflation, high interest rates and the likelihood of global recession ended with optimism that a soft landing is now the most likely outcome. This more benign macroeconomic environment provided a positive tailwind for growth biased strategies such as WCM Quality Global Growth. The additional excess returns the strategy delivered can be attributed to the careful selection of companies meeting WCM’s twin criteria of an expanding economic moat plus aligned corporate culture. Encouragingly, in terms of the outlook for the strategy going forward, its price to earnings multiple ended 2023 unchanged at circa 25 times. While the strategy’s performance in share price terms was exceptionally strong, this was matched by the earnings growth delivered by its underlying company holdings.
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.