We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in March 2022.
The Strategy1 delivered a return of -4.34% 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)
In March, global equity markets were marginally higher in local currency terms, but not sufficiently so to prevent their worst quarterly return since the beginning of the COVID-19 pandemic with the Benchmark down 8.25% in the quarter. The Russian invasion of Ukraine remained a primary focus for investors, continuing to add to the already heightened fears of rising inflation worldwide. Brent oil prices spiked early in March before ending the month at $103 per barrel, a 33% increase from the level at the beginning of the calendar year. The US Federal Reserve responded to these inflationary concerns by raising its discount rate by 0.25% in March. After first raising interest rates in December 2021, the Bank of England increased them again twice in the first quarter and the European Central Bank signalled they too are likely to begin tightening rates before the end of the year. Energy, Utilities and Materials were the best performing sectors in March and were the only three to record positive returns for the quarter. While developed markets recovered somewhat during the month, emerging markets were lower as a surge in Omicron cases weighed on the Chinese equity market. At a factor level, growth underperformed, consistent with recent periods. The Australian dollar was stronger in March, reducing returns for unhedged global portfolios.
From a sector allocation perspective, the portfolio’s underweight exposure to Energy and Consumer Discretionary detracted from relative performance, as did Industrials (overweight). Communication Services (no weight) was the largest positive contributor to relative performance, followed by the overweight exposure to Health Care. In terms of stock selection, Consumer Staples was the best performing sector relative to the Benchmark. On the flipside, Information Technology was the worst performer, followed by Consumer Discretionary.
Recent portfolio performance relative to the market has been disappointing, but not unexpected given the style rotation towards more value-oriented sectors. In previous periods of underperformance and recovery, WCM’s playbook is the same as it is today, i.e. remaining disciplined and choosing only the highest-quality companies that have expanding competitive advantages supported by well-aligned cultures. This disciplined approach not only to stock selection, but also to portfolio construction, helps to achieve a good risk-reward balance and ultimately delivers the best long-term returns for investors.
DISCLAIMER: Switzer Asset Management Limited (SAML)(ABN 26 123 611 978, AFSL 312247) is a wholly owned subsidiary of Contango Asset Management Limited (ABN 56 080 277 998), a financial institution listed on the ASX (CGA). CGA has prepared this material for general information purposes only for WCM Global Growth Limited, a listed investment company (ASX: WQG).
SAML 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).
Contango International Management Pty Limited (CIML)(ABN 33 617 319 123) is the investment manager for WQG and is an authorised representative of SAML. 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 Contango Group.
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, CGA or SAML. 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 SAML, CGA, 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.