WCM Quality Global Growth January 2020 NTA Statement & Portfolio Update

We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth strategy in January 2020.

The strategy is conveniently available in three 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:

Portfolio Update

The strategy had an outstanding month in January 2020. The portfolio has outperformed over 1 and 6-months. The longer-term performance of the portfolio also remains strong with returns exceeding that of the benchmark over 1-year, 2-years and since inception.



1. Portfolio performance is calculated after investment management and performance fees are paid. 2. Benchmark refers to the MSCI All Country World Index ex-Australia USD Gross Total Return Index reported in AUD and unhedged. Returns include the reinvestment of income. Past performance is not indicative of future results.

The performance of the three vehicles may vary slightly over the short term but over the medium and long term they will likely share a strong positive correlation.

Global equity markets started 2020 on a positive note with the benchmark US equity S&P 500 index posting six record highs. By month end however markets were marginally lower, though the weaker Australian dollar boosted returns for unhedged portfolios such as the WCM Quality Global Growth strategy.

The market’s early gains were halted by a combination of the rapid spread of the coronavirus in China and the significant increase in tensions between Iran and the US. So called ‘safe haven’ assets were the beneficiaries of this risk off sentiment with the yield on US 10-year government bonds declining 40 basis points to 1.5%.


Image Source: Belt & Road News

Sector performance during the month was heavily influenced by this nervous macro backdrop. The Energy and Material sectors were weaker while the more defensive areas of the market including Health Care and Utilities outperformed. The larger capitalisation US stocks also recorded a positive month.

The uncertain macro and geopolitical environments continue to present challenges for many market participants. While always cognisant of shorter-term cyclical trends, WCM’s investment team does not allocate time or resources to analysing them.

The Quality Global Growth portfolio is constructed via a bottom up company research-based approach. The focus is on finding companies the investment team believes have a growing competitive advantage (expanding economic moat) and a corporate culture aligned to this moat trajectory.

How Investments Are Chosen For This Portfolio

WCM’s two key criteria for any company to be considered for inclusion in the WCM Quality Global Growth Strategy are 1) a rising competitive advantage (or expanding economic moat); and 2) a corporate culture that supports the expansion of this moat. WCM believes the direction of a company’s economic moat is of more importance than its absolute width or size.

Its research is therefore focused on identifying those companies with a positive moat trajectory as measured by a rising return on invested capital (ROIC) as opposed to those with a large but static or declining moat. WCM also strongly believes that corporate culture is a key determinant of a firm’s ability to achieve a consistently growing moat. WCM has developed a proprietary approach to analysing corporate culture and has investment team members solely dedicated to this part of their process.

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