We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in November 2021.
The Strategy1 delivered a return of 4.45% during the month. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over six months, 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)
Having started the month strongly on the back of positive corporate earnings reports, global equities (in local currency terms) retreated following hawkish comments from the US Federal Reserve and concerns over the new Omicron strain of the COVID-19 virus. Third-quarter earnings growth for the S&P 500 came in at close to 40%, leading to upward revisions to analysts’ full-year forecasts. However, in a testimony to Congress Federal Reserve Chair Jerome Powell dampened investor enthusiasm by stepping back from his previous description of soaring US inflation as ‘transitory’. This sparked fears of an earlier than expected paring back of bond purchases and increases in interest rates. The October inflation number in the US of 6.2% year-on-year only added to these tapering and interest rate fears. The emergence of the latest COVID-19 variant was the other factor weighing on markets towards the end of November. While little is still known about the effectiveness of existing vaccines in combating Omicron, markets remain cautious about its potential impact on economic growth. The Australian dollar was weaker in November, a positive for unhedged portfolios.
The portfolio’s underweight position in Financials was the largest positive contributor to its outperformance in November, followed by the overweight exposure to Information Technology. On the flip side, the overweight position in Health Care and Industrials detracted from relative performance.
Georgia-based retailer, Floor and Decor operates well-merchandised, warehouse-like showrooms with wide selections and consistent stock inventory. Its moat stems from its insourcing model which gives it an immense price and selection advantage. WCM Investment Management (WCM) expects the company to use that advantage to grow its business with professional contractors to boost brand awareness and optimise its omni-channel strategy. This, along with its customer-centric culture, positions Floor and Decor for a long runway of store growth and market share gains.
The recent sharp decline in several high-multiple growth stocks has many investors asking about the outlook for the so-called FAANG (Facebook, Apple, Amazon, Netflix and Google) group of companies. While each of these companies has been owned in WCM Quality Global Growth strategy at some stage, none is a current holding. It would be a mistake to however to conclude that WCM considers these weak companies. The decision to sell a stock is typically for one of two reasons, either the investment team can no longer make the case that the company’s economic moat (competitive advantage) is growing, or a superior opportunity has been identified. Valuation can also be a trigger for portfolio activity, but this is generally more a catalyst for the ‘trimming’ as opposed to outright sale of a position.
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.