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 2023.

The Strategy¹ delivered a return of 3.15% during the month, outperforming the benchmark MSCI All Country World Index return of 3.07%. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over one month, 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)

Strategy Update

Global equities made a positive start to 2023 with strong gains for both developed and emerging markets. Investor risk appetite rose in January following the sixth successive month of easing in US inflation and a relatively healthy annualised fourth quarter GDP growth rate of 2.9%. Positive developments in China boosted the local equity market and in turn emerging markets more broadly. Economic growth for the fourth quarter was higher than expected, with leading indicators such as subway passenger traffic turning upwards and regulatory pressure on the internet sector easing. Economic data from Europe provided further encouragement for markets. Reported GDP growth and leading indicators exceeded expectations and December’s Eurozone inflation print confirmed a further easing from 10.2 to 9.2%. Market leadership at a sector level during January came from those considered more economically sensitive such as Technology, Consumer Discretionary and Communication Services. At a regional level, emerging markets led by Chinese equities outperformed developed markets. The Australian dollar was stronger during the month, dampening returns for unhedged portfolios.

Stock selection contributed positively to relative performance of the portfolio in January with the largest contribution coming from holdings in the Consumer Discretionary, Health Care and Consumer Staples sleeves of the portfolio. Conversely, the largest detractors from a stock selection perspective came from the Industrials and Financials sectors. In terms of sector allocation, the portfolio’s underweight positions in Energy (zero exposure) and Consumer Staples added to relative performance. The main detractors were the above Benchmark positions in Health Care and Industrials and zero weighting in Communication Services.

The 2022 bear market in both bonds and equities has put significant pressure on the money management industry. Many industry participants have already announced reductions in head count and product closures. Investors familiar with WCM will be aware of the importance its investment team places on identifying companies demonstrating culture and economic moat alignment. Maybe less well known is how equally important this is for fund managers running their own firms. WCM’s response to the industry downturn reveals a lot about its focus on culture and moat expansion. Unlike most of its peers, WCM has continued to invest in people across all parts of the firm to grow its moat. This included adding to its team of culture analysts as referenced in WCM’s recent client letter: ‘Most importantly of all, we are doubling down on our culture focus. In 2022 we significantly expanded our team of culture-focused specialists with three new Business Culture Analysts, compounding our already strong lead in analysing companies’ culture from the key perspective of culture-moat alignment, culture strength and culture adaptability.’