We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in July 2024.
The Strategy1 delivered a return of 1.97% during the month, compared with the benchmark MSCI All Country World Index return of 3.95%. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over one, five and 10 years, and since inception.
Strategy Update
July was another positive month for global equity markets, as better-than-expected inflation numbers in the US provided optimism of an interest rate cut as early as the next Federal Open Market Committee meeting in September. The second quarter reporting season in the US was another positive as it continued to paint a healthy picture of corporate America. Within equity markets, there was considerable rotation in terms of market leadership during the month.
Artificial Intelligence (AI) related stocks and the Technology sector more generally had a weaker month, while previous laggards including banks and the smaller market capitalisation names gained. On a regional basis, Europe was the strongest performer, while Asia matched the overall market despite weakness in Chinese equities. In terms of factors, value outperformed growth.
The portfolio’s underperformance in July can be primarily attributed to stock selection. Partially offsetting this was a positive contribution from sector allocation, with the portfolio benefitting from an overweight exposure to Industrials and Health Care and zero position in Utilities. The portfolio currently holds seven Health Care stocks. Of these, the largest holding at month end was Denmark based Novo Nordisk, the global leader in diabetes medicine. The worldwide presence of diabetes provides a durable tailwind and Novo Nordisk’s laser focus on metabolic diseases and its resulting GLP-1 dominance forms the basis of its economic moat. This moat should continue to widen, driven by a focused culture and a superior innovation engine.
The growth in AI remains a positive tailwind for global equity markets. The Quality Global Growth Strategy portfolio has direct and indirect exposure to this tailwind via holdings such as NVIDIA, Arista Networks and Entegris. The investment team at WCM, however, believe there is an abundance of other secular growth themes occurring at the greatest rate in decades. Examples of additional themes exhibiting lengthy runways include aerospace, computing, defence, medicine and infrastructure. WCM’s focus on owning companies with positive moat trajectories supported by well-aligned corporate cultures is a source of real optimism that the portfolio will have meaningful exposure to the long-term winners in these themes.
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.
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.
