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 2024.

The Strategy¹ delivered a return of 6.13% during the month, outperforming the benchmark MSCI All Country World Index return of 3.85%. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over one month, one, 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 find the monthly investment update under ‘More Information’ 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

Following a very strong finish to 2023, global equity markets had a more mixed start to the new year. Developed markets posted solid gains with the ‘Magnificent 7’ again to the fore. However emerging markets struggled, held back by China where concerns over prolonged slow economic growth and the weak property market remain. The economic data in January supported the growing optimism of a soft landing for the US economy, although comments from Federal Reserve chairman Jerome Powell at month end dampened hopes of an interest rate cut at its next meeting in March. Expectations of an early interest rate cut also receded in Europe, although markets are still discounting lower rates there by year end. At a sector level globally, the best performers included Information Technology and Communication Services with Materials and Real Estate lagging. It was a positive month for both growth and quality factors.

The outperformance of the portfolio relative to the Benchmark in January was primarily due to stock selection, with the largest contributions coming from holdings in the Health Care, Information Technology and Industrials sectors. Examples of portfolio holdings in these sectors include Novo Nordisk (Health Care), Microsoft (Information Technology) and General Electric Company (Industrials). From a sector allocation perspective, positive contributions came from the overweight position in Health Care and having zero exposure to both Real Estate and Utilities. Sector allocations which detracted from relative performance included the above Benchmark positions in Industrials and Materials and the underweight allocation to Communication Services.

WCM Investment Management’s definition of a quality company is one with an expanding economic moat, or in finance terms has a rising return on invested capital (ROIC). This differs from most of WCM’s peers who define quality on the basis of the width as opposed to the direction of a company’s economic moat. This leads to WCM investing in many companies typically not found in other quality growth portfolios. One such example is General Electric Company (GE), which was added to the portfolio in December 2023. GE is a key player in global aerospace propulsion and equipment with an attractive “razor and blade” business model. GE’s moat comes from its scale, installed base, intellectual property and high switching costs. The positive trajectory of this moat is driven by GE’s increasing dominance in narrow body planes and the expanding aftermarket parts and services business. The firm’s culture, the other key investment criteria for WCM, has undergone a transformation under the leadership of CEO Larry Culp who has driven a much sharper focus on efficiency and capital deployment.