We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in February 2022.
The Strategy1 delivered a return of -6.27% during the month. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over 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 fell further in February, making the two-month decline the worst start to a calendar year since 2009. The first half of the month was dominated by fears over the potential scale of interest rate increases by global central banks in response to rising inflation. By mid-month, investors’ attention had switched to the conflict in Ukraine with the invasion on 24 February sparking a significant spike in volatility. Oil prices subsequently surged as fears rose of the possible withdrawal of Russian supply from world markets. By month end, the price per barrel of Brent crude had crossed $100, compared with the year-end price of $73. This in turn created uncertainty as to whether central banks would increase rates even more in response to the higher inflation threat or take a less aggressive approach due to the dampening effect on global growth of rising oil prices.
The ‘risk off’ sentiment in markets contributed to another difficult month for growth sectors relative to value. Materials and Energy, both of which posted positive returns, led the sector performance tables with Information Technology and Consumer Discretionary among the weaker performers. At a country level, the oil and commodity-dominated markets fared best relative to importers of these materials such as Germany, China and India. The Australian dollar strengthened in February, putting a further drag on returns for unhedged portfolios.
The portfolio’s zero weighting to the Energy sector weighed heavily on portfolio performance in February. The other sector exposures detracting from relative performance were Information Technology (overweight) and Utilities (underweight). Positive sector allocation contributions came from the overweight positions in Healthcare and Industrials and zero exposure to Communication Services.
California-based Lam Research (Lam) is a leading global supplier of wafer fab equipment to the semiconductor industry, with core competencies in etch and deposition. Lam’s tailwind is the increased use of etch in advanced process technologies and its economic moat derives from its superior technology, customer stickiness and a huge installed base. The expansion of its moat is expected to come from leveraging these advantages and continued investment in research and development.
A lot of market commentary of late has focused on the ‘heightened levels of uncertainty’ caused by rising inflation and the Russian invasion of Ukraine. The reality, however, is that investing always involves high levels of uncertainty. A disciplined investment process is the best path to navigating this uncertainty. WCM’s process is not only disciplined, as demonstrated by the long-term performance of the Quality Global Growth strategy, but it is proven too. While ‘heightened levels of uncertainty’ may cause some investors to question the investment process, the team at WCM will continue to focus on identifying companies with corporate cultures supportive of their expanding economic moats.
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.