We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in July 2023.

The Strategy¹ delivered a return of 1.08% during the month, compared with the benchmark MSCI All Country World Index return of 2.43%. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over 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 posted their third straight positive month in July. The combination of better-than-expected inflation and economic growth numbers in the US brought optimism that the US Federal Reserve may be on track to engineer a ‘soft landing’. While Federal Reserve chairman Jerome Powell did not give any firm guidance on whether July’s rate rise would be the last of this tightening cycle, he did indicate that a recession in 2023 was now less likely. Economic news in the rest of world was in general supportive of markets too. UK June inflation was lower than expected and the European Central Bank hinted that interest rate rises may be close to pausing. While economic growth in China slowed in the June quarter, policy easing plus expectations of further stimulus to come were additional positive signs for investors. July’s global equity market gains were broad based with all the major country indices posting positive returns. Investors’ increased risk appetite was reflected in the outperformance of emerging markets relative to developed markets and smaller capitalisation stocks versus large. Basic Resources, Banks and Energy were among the best performing sectors with Health Care and Utilities lagging. There was minimal dispersion at a factor level.

Security selection was the primary contributor to the portfolio’s underperformance in the month. The strong relative returns from Technology, Consumer Staples and Industrials holdings were more than offset by stocks in the Health Care, Financials and Consumer Discretionary sectors of the portfolio. From a sector allocation perspective, the underweight exposure to Consumer Staples, zero position in Utilities and above benchmark weight in Consumer Discretionary added to relative performance. On the other hand, the above benchmark weight in Health Care and zero position in both Communication Services and Energy detracted from performance.

The strong returns from global equity markets year-to-date have been achieved against a backdrop of many market commentators warning of the need for caution in the face of an expected economic downturn. As markets have risen these same commentators are now highlighting ‘stretched valuations’ as another reason for caution. For the Quality Global Growth strategy (the Strategy), it is encouraging that its year-to-date returns have been primarily driven by earnings growth as opposed to price-to-earnings multiple expansion. A market environment like this (i.e., one which is rewarding company fundamentals) typically bodes well for the Strategy. Regardless of the market outlook, the investment team at WCM Investment Management remains confident its focus on positive moat trajectory businesses with well-aligned adaptable cultures will deliver positive long-term outcomes for investors.