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 2023.

The Strategy¹ delivered a return of 5.75% during the month, outperforming the benchmark MSCI All Country World Index return of 4.35%. 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

Global equity markets recorded their best month for three years in November. Falling inflation in developed markets and its implication for interest rates was the primary source of positive market sentiment. October inflation in the US fell to 3.2% (year on year) from the previous month’s figure of 3.7%. Notwithstanding the cautionary message from Federal Reserve chair, Jerome Powell, that the Central Bank is not currently thinking about rate cuts, markets have begun to countenance that rates have at a minimum peaked. Inflation prints in the Eurozone (2.4% versus 2.9% previously) and the (UK 4.6% versus 6.7%) were also taken as a signal that their respective central banks are also close to the end of their tightening cycles. The more positive picture for inflation and short-term interest rates was also positive for government bond markets with yields in the US and Europe declining significantly. The macroeconomic data was more mixed elsewhere in the world. Chinese retail sales exceeded market expectations, but new home sales continue to decline. In Japan third quarter GDP was weaker than expected with domestic demand and capital expenditure both disappointing. Developed market returns exceeded emerging markets in November, the latter impacted by the relatively poor performance of Chinese equities. At a sector level, the best performers were those most sensitive to the decline in bond yields including Information Technology and Real Estate. The decline in long-term interest rates also contributed to the outperformance of growth versus value during the month.

The strategy’s outperformance in November was primarily due to stock selection, with the largest positive contribution coming from holdings in the Information Technology, Financials and Health Care sectors. The largest detractor from a stock selection perspective was Materials. In terms of sector allocation, the zero allocation to Energy and Communication Services and underweight position in Consumer Staples were the leading contributors. Conversely, the above benchmark weight in Health Care and Materials and zero exposure to Real Estate were the sector allocations which detracted most from relative performance.

Fund researchers and prospective investors rightly spend a lot of time analysing the process behind an investment manager’s decision to add a new position to a portfolio. An often-overlooked part of the investment process, however, is the manager’s sell discipline. The investment team at WCM has some clear rules governing its sell discipline, including that a holding will be sold if there has been a material change to the investment thesis underwriting the original decision to buy the position. A recent portfolio example is Pernod Ricard Winemakers, the second largest global spirits brand. During the initial underwriting of the position, WCM anticipated a cultural and operational transformation that would spur faster growth, especially in the US, China and India. Execution, however, has been disappointing, bringing the strength of the culture and management team into question. As a result, the portfolio position in Pernod Ricard Winemakers was sold in the third quarter of this year.