We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in January 2022.
The Strategy1 delivered a return of -9.53% 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 sharply in January, posting their worst month since March 2020. US inflation reached 7% in December leading to the US Federal Reserve signalling an increase in interest rates in March. This would be the first of five increases the market is now expecting in 2022. This led to a 0.27% jump in the US 10-year bond yield which in turn put pressure on other longer duration assets such as growth stocks. Tensions between Russia and Ukraine further added to the market’s inflationary concerns. At a regional level, emerging markets, while lower over the month, outperformed developed markets. In terms of sectors the relatively higher-multiple Technology and Healthcare stocks led the market decline, while the more value-oriented energy and financial names delivered modest gains. The expected imminent increase in US interest rates provided support for the US dollar in January, providing some offset from declining markets for unhedged portfolios.
The sharp selloff in growth stocks was a significant headwind for the portfolio in January. From a sector perspective, this was most prevalent in portfolio overweight sectors such as Technology and Healthcare which are heavily exposed to the negative impact of rising interest rates on price to earnings multiples. The underweight exposure to Financials, in particular banks which are considered beneficiaries of rising rates, and zero exposure to energy stocks, also dragged on relative performance.
Norway-based Autostore was added to the portfolio in the fourth quarter of 2021. Autostore provides warehouse efficiency solutions via its cubic automatic storage and retrieval ecosystem. Autostore’s robots help customers such as IKEA, Puma and Best Buy. Intellectual property, sticky customer relationships and its win-win partnerships with system integrators form the basis of its moat. This moat is expanding as Austostore becomes entrenched with its customers, leverages troves of proprietary data and invests heavily in research and development to grow its edge. The company’s culture is lean, bold and transparent which is well aligned with its strategy to reduce warehouse waste, innovate and remain adaptable to changing customer needs.
The year has begun with much speculation over the outlook for inflation, interest rates and global growth. The investment team at WCM does not claim to have any edge in predicting the range of possible macro-outcomes. As such, investors should not expect to see this portfolio chasing sectors such as banks and energy which may be benefiting from short-term macro tailwinds but have a dearth of companies which meet WCM’s investment criteria. This portfolio is designed to deliver long-term returns from exposure to companies with expanding competitive advantages supported by aligned corporate cultures.
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.