WCM Quality Global Growth Quarterly Performance and Portfolio Update – March 2020

During this brief video update, Marty Switzer talks to Associate Global Partners’s Head of Distribution, Alistair Dunne, to discuss the WCM Quality Global Growth strategy’s significant outperformance over the quarter, and the stocks and sectors that contributed to this result.

Marty Switzer (MS): Hi, I’m Marty Switzer, welcome to the WCM Quality Global Growth Portfolio and performance update for the quarter. With me today is our Head of Distribution Al Dunne, g’day Al.

Alistair Dunne (AD): Hello Marty, how are you?

MS: Very well, mate. So, how did the WCM Quality Global Growth Portfolio perform over the last quarter?

AD: Thanks Marty, it was definitely a challenging quarter but as per previous periods of dislocation and sort of draw down, the portfolio’s held up incredibly well. If we use the unit trust as an example, for the quarter it was down -1.01% versus the market decline of -9.08% so it’s over 800 points of outperformance there for the quarter.

MS: Outperformance was almost 8%?

AD: Correct.

MS: What were the major contributors to this outperformance?

AD: The portfolio’s always had a bias to large cap versus small cap stocks, and that helped, and then the high quality names that we hold versus some of the lower quality stocks in global markets definitely provided a positive tailwind through the quarter. At a sector level, underweight positions in energy and financials, two of the harder hit sectors, and overweight exposure to the two best performing sectors being healthcare and tech contributed strongly to the relative outperformance for the quarter. In terms of names the largest contributions came from eCommerce platform Shopify, followed by Netflix, and two of the recent purchases added into the portfolio through the quarter, being Ferrari and MSCI.

MS: Now what companies detracted from the performance over the period?

AD: Yeah, so the major detractors did come from the financials, financial sector, and they were the Indian bank HDFC and First Republic Bank.

MS: Now were there any significant changes to the portfolio over the quarter?

AD: Yeah, probably the most significant change was just the trading activity within the portfolio through the quarter and most particularly through March as the manager took advantage of compelling long-term opportunities that the volatility was presenting. Portfolio positions were built into companies like Ferrari and the equity index and portfolio analytics provider MSCI, were amongst the new positions added. In terms of outright sales, positions like Netflix, Compass Group and STERIS were some of the names making some higher conviction positions through the quarter.

MS: Last question, what’s the team at WCM saying about the outlook right now?

AD: They remain focused on things as they would if it through a normal environment, which is what you’d want from your manager, namely finding businesses with expanding competitive advantages or economic moats as they are, and where possible a corporate culture that supports that advantage. So, they don’t claim to have a unique insight into what the next couple of quarters look like, we’re very confident in the positioning of the portfolio now through this quarter for the next three to five years.

MS: Al, thanks for your time.

AD: Thanks Marty.

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