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 2024.
The Strategy1 delivered a return of 6.60% during the month, outperforming the benchmark MSCI All Country World Index return of 3.57%. 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.
Strategy Update
October was a positive month for the MSCI World Index in Australian dollar terms, as currency movements offset weakness at the underlying market level. US economic data released during the month was one contributing factor to the market weakness. On balance, while this data was stronger than expected, it tempered market expectations regarding the pace and scale of future reductions in interest rates. At the corporate level, reported earnings in the US for third quarter have been favourable with the Financials sector being a standout. The economic data from Europe was less positive from a growth perspective with business surveys suggesting a more challenging outlook. China also disappointed with the announced fiscal stimulus measures falling short of market expectations. This disappointment was reflected in the performance of the Chinese equity market which gave up some of the very strong gains it made in September. This in turn contributed to emerging markets underperforming developed markets. Sector performance was led by Financials and Technology with the laggards including Health Care and Consumer Staples. In terms of factors, growth performed strongly relative to value across most major markets.
Stock selection was the primary contributor to the WCM Quality Global Growth Strategy’s outperformance in October, with the largest contribution coming from the Information Technology, Health Care and Industrial sectors. On the flipside, stock selection from the Communication Services and Consumer Discretionary sleeves of the portfolio were the major detractors. From a sector allocation perspective, the portfolio’s overweight allocation to Consumer Staples was the largest positive contributor to relative performance.
Recent portfolio activity includes the addition of Freshpet, Inc. (Freshpet), a US based manufacturer of fresh and refrigerated cat and dog food made with natural ingredients and no preservatives. Freshpet has built a formidable economic moat through its scale, vertical integration and dominant share with US big box retailers. The trajectory of this moat is expected to grow as the firm expands its business and improves its value proposition for customers (more products), suppliers (more volume) and retailers (more traffic). Freshpet’s culture emphasises ownership and transparency, reducing friction and increasing alignment within its value chain.
Looking forward, the US election result is likely to introduce some new macro related “noise” for markets on which to focus. Regardless of how noisy this period is, the WCM investment team believes that having a balanced approach across the three growth buckets (defensive, secular and cyclical) and various tailwinds, industries and geographies strongly positions the portfolio to deal with any new challenges.
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.
DISCLAIMER: AGP Investment Management Limited (AGP IM) (ABN 26 123 611 978, AFSL 312247) is a wholly owned subsidiary of Associate Global Partners Limited (AGP) (ABN 56 080 277 998), a financial institution listed on the ASX (APL). AGP IM has prepared this material for general information purposes only for WCM Global Growth Limited, a listed investment company (ASX: WQG).
AGP IM is the responsible entity for WCM Quality Global Growth Fund (Quoted Managed Fund) (ARSN 625 955 240) (ASX: WCMQ) and WCM Quality Global Growth Fund (Managed Fund) (ARSN 630 062 047).
AGP International Management Pty Ltd (AIML) (ABN 33 617 319 123) is the investment manager for WQG and is an authorised representative of AGP IM. WCM Investment Management, LLC (WCM) is the underlying manager and applies its WCM Quality Global Growth Equity Strategy (the Strategy), excluding Australia, in managing each of WQG, WCMQ and WCM Quality Global Growth Fund (Managed Fund)(the Funds). WCM does not hold an AFSL. WQG and CIML are part of the AGP Group.
Any references to ‘We’, ‘Our’, ‘Us’, or the ‘Team’ used in the context of the portfolio commentary, is in reference to WCM Investment Management, as investment manager for the Strategy or CIML as investment manager for WQG.
Even though the Strategy, excluding Australia, is applied to each of WQG, WCMQ and WCM Quality Global Growth Fund (Managed Fund) certain factors including, but not limited to, differences in cash flows, fees, expenses, performance calculation methods, portfolio sizes and composition may result in variances between the investment returns for each portfolio. The performance of the Strategy is not the performance of the portfolios and is not an indication of how WQG, WCMQ and WCM Quality Global Growth Fund (Managed Fund) would have performed in the past or will perform in the future.
The material should not be viewed as a solicitation or offer of advice or services by WCM, AGP or AGP IM. It does not contain investment recommendations nor provide investment advice. It does not take into account the objectives, financial situation or needs of any particular individual. Investors should, before acting on this material, consider the appropriateness of the material.
Neither AGP IM, AGP, their related bodies corporate, entities, directors or officers guarantees the performance of, or the timing or amount of repayment of capital or income invested in the Funds or that the Funds will achieve its investment objectives. Past performance is not indicative of future performance.
Any economic or market forecasts are not guaranteed. Any references to particular securities or sectors are for illustrative purposes only and are as at the date of publication of this material. This is not a recommendation in relation to any named securities or sectors and no warranty or guarantee is provided that the positions will remain within the portfolio of the funds. Any securities identified and described are for illustrative purposes only and do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable.
Investors should seek professional investment, financial or other advice to assist the investor determine the individual tolerance to risk and needs to attain a particular return on investment. In no way should the investor rely on information contained in this material.
Investors should read the Product Disclosure Statements (PDS) of the Funds or any relevant offer document in full before making a decision to invest in these products.
