We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in April 2022.

The Strategy¹ delivered a return of -4.92% 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)

Strategy Update

The selloff in global equity markets gathered pace in April with many major indices entering correction territory i.e., a decline of more than 10% from the most recent peak levels. Inflation continues to be the primary concern for investors with the March US Consumer Price Index at 8.5%, its highest level since December 1981. The absence of any signs of resolution to the Ukraine invasion or ending of the COVID-19 lockdowns in China added to the bleak picture for equity market investors. In response to the deteriorating inflation outlook, markets are now pricing in 50 basis point increases at the next three Federal Reserve meetings. This combination of tightening monetary policy and rising inflation made it a challenging month for bond markets too, with US 10-year treasury yields ended the month close to 3%.

Within markets, there were very few places to hide with all major developed markets declining during the month. Emerging markets also suffered with only those heavily exposed to Energy and Commodity sectors posting a positive return. In overall terms for sectors, Consumer Staples and Energy stocks led the market, with Communication Services and Information Technology at the other end of the performance ladder. The portfolio’s performance was hampered by its overweight exposure to Information Technology and underweight position in Energy and Utilities. However, the zero allocation to Communication Services and overweight exposure to Health Care benefited the portfolio. At a factor level, it was another month during which value outperformed growth. The Australian dollar was weaker in April, providing a partial offset for unhedged global equity portfolios.

Snowflake Inc, a US-based cloud data warehouse firm, is a good, recent example of WCM’s investment philosophy in action. The continued migration of workloads to the public cloud and the sheer volume of data being collected and analysed provide powerful tailwinds for the business. Its moat comes from having a superior technology stack, strong network effects and high-switching costs. This moat is expanding as Snowflake adds more customers and new features such as data sharing. The combination of this expanding moat and strong culture, led by CEO Frank Slootman, make it an ideal fit for the Quality Global Growth portfolio.

The WCM investment team remains confident that the companies in which the portfolio is invested will continue to navigate this market uncertainty. This confidence comes from what WCM sees as its edge, i.e., the focus on owning positive economic moat trajectory businesses with strong and adaptable corporate cultures.