We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in October 2021.

The Strategy¹ delivered a return of 1.56% during the month. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over one month, six months, three years, five years, 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)

Strategy Update

Global equity markets bounced back strongly from September’s decline, posting their strongest month of the year. The corporate earnings reporting season was the primary catalyst for these market gains with more than 70% of companies having exceeded consensus analyst estimates. One of the surprising features of this reporting season has been the resilience of profit margins in the face of rising input prices. Tentative signs that embattled Chinese property developer, Evergrande, is beginning to work through its debt problems was another positive for markets. At a macroeconomic level, investors’ attention remains keenly focused on the inflationary impact of rising energy prices and supply chain bottlenecks. However, for now these inflation concerns are more evident in bond than equity markets with the former starting to discount a faster pace of monetary tightening from global central banks. The equity market rally was broad based with all major sectors recording a positive return. At a regional level, developed markets outperformed emerging and growth, and quality and price momentum factors beat value. The Australian dollar appreciated in October, dampening the returns for unhedged portfolios.

Materials and Industrials were the portfolio’s top-performing sectors in the month, with the laggards being Information Technology, Consumer Discretionary and Healthcare. Recent portfolio activity includes the addition of Lam Research Corporation (Lam), the leading global supplier of wafer fabrication equipment to the semiconductor industry. Lam’s economic moat is derived from its superior technology and huge installed base. The expansion of this moat will come from leveraging these advantages and continued investment in research and development.

Most market commentary is focused on what the team at WCM would describe as ‘expiring knowledge’. This is the headline news that fills our screens today, which in five and 10-years’ time we will look back on and realise didn’t actually mean anything from a long-term investment perspective. Examples of this expiring knowledge can be an individual quarterly earnings per share number or a monthly inflation print. Many commentators also like to discuss the ‘outlook’. WCM’s response to the ‘outlook’ question is always the same: ‘there is plenty of uncertainty and most questions have unknowable answers, whether about markets, economies, international relations etc.’ Instead, the WCM team chooses to focus on businesses that are adapting and continuing to grow their competitive advantages. While nobody can know how these businesses will fare in the next quarter, WCM believes they will generate compelling returns in the long term.