We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth Equity Strategy (the Strategy) in September 2024.
The Strategy1 delivered a return of -0.40% during the month, compared with the benchmark MSCI All Country World Index return of 0.11%. The Strategy has delivered returns in excess of the benchmark MSCI All Country World Index over one, five and 10 years, and since inception.
Strategy Update
Global equities markets overcame a weak start to the month, finishing broadly flat for the month in Australian dollar terms. Macroeconomic news was dominated by the announcement of interest rate cuts by a host of central banks including those in the US, Eurozone, Canada, Sweden and Switzerland. With inflation cooling and economic growth slowing, global market expectations were for significant additional easing in global monetary conditions. Emerging markets were particularly strong in September with Chinese equities the standout performer, gaining more than 20%. Sentiment towards the Chinese economy and in turn the equity market was boosted by the surprise announcement of aggressive fiscal and monetary stimulus packages. At a sector level the strongest returns came from Utilities, Consumer Discretionary and Materials. In terms of factors, growth outperformed value which in turn beat quality, while large capitalisation stocks bettered small.
The portfolio’s performance in September largely reflected sector allocation. The sector exposures detracting most from performance were the portfolio’s overweight exposure to Health Care stocks and its underweight positions in Communication Services and Utilities. These sector positions offset the positive contribution from the underweight allocation to Energy and Consumer Staples and above market position in Industrials. In terms of stock selection, the largest positive contribution to the performance of the portfolio came from Information Technology, with a negative contribution from Health Care.
The so-called “Magnificent Seven” stocks have been a significant contributor to the broader market’s strong year-to-date returns. The Strategy has three of the seven stocks: Microsoft, Amazon.com and NVIDIA. However, the strong performance of the Strategy over the past year continues to be underpinned by superior underlying fundamentals, with its year-to-date returns being driven almost entirely by earnings growth. At quarter end, the portfolio’s price-to-earnings multiple of circa 23 times was close to unchanged from the start of the year and represents a decade plus low relative to MSCI All Country World Index.
There were three new portfolio positions initiated in the September quarter, being reinsurer Reinsurance Group of America, pet food company Freshpet and South-East Asian e-commerce and gaming firm Sea. Two holdings were sold, being LVMH Moët Hennessy Louis Vuitton and Old Dominion Freight Line. In both cases the catalyst for sale was the WCM investment team’s view that they could no longer make the case for these companies having expanding economic moats.
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.
