WCM Quality Global Growth January 2021 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 2021.

The strategy composite1 marginally underperformed the benchmark MSCI All Country World Index by -1.18%. The strategy composite has delivered returns in excess of the benchmark over the previous six and twelve month periods, as well as over three, five and ten 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 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 WCM Quality Global Growth Strategy Composite (the Composite) to provide a better understanding of how the team has managed this strategy over a longer period. 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. 6. Portfolio return is calculated before expenses and after investment management and performance fees are paid. Performance includes the reinvestment of dividends and income. Past performance is not indicative of future results

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:

Portfolio Update

Global equity markets began the year strongly, building on their solid finish to 2020. The Democrats’ victory in the Senate race in Georgia was taken as a positive sign in terms of the increased probability of further larger fiscal stimulus in the US. By month end however these early gains were largely eroded as concerns about the supply of COVID-19 vaccines in Europe and fears over the emergence of new strains of the virus weighed on markets.

The sharp rally in several heavily shorted US stocks added to market volatility in the latter part of the month. This short squeeze on several hedge funds was co-ordinated by a group of retail investors executing trades via low-cost trading platforms. As the price of these stocks soared, the exposed hedge funds were forced to close their short positions. The better performing pockets of the market in January included small companies and emerging markets. At a sector level, energy and healthcare were among the better performers while consumer staples lagged. The Australian dollar was marginally lower by month end.

The short selling controversy referenced above has captured a lot of media attention. Many commentators cried foul as they believed the aggressive buying of fundamentally challenged companies and forced selling of stronger ones to finance this activity threatened the concept of fair price discovery. While the media is likely to continue to focus on this ‘battle’ between retail investors and professionally managed hedge funds, it should not concern investors in long term focused portfolios such as the WCM Quality Global Growth Strategy. This portfolio is invested in companies the WCM investment team believes have growing competitive advantages (expanding economic moats) over the long term, i.e. 5 years and beyond. While the WCM Quality Global Growth Strategy will not be immune to short term retail investor and hedge-fund-induced market volatility, its longer-term performance will be driven by the strength of the underlying companies in the portfolio.

[sc name="post-disclaimer-qgg"]