WCM Quality Global Growth August 2019 NTA & Portfolio Update

We are pleased to provide you with a summary report on the performance of the WCM Quality Global Growth strategy in August 2019.

The strategy is conveniently available in three 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:

Portfolio Update

The strategy achieved a positive return for the month and outperformed its benchmark by over 2%. The strategy has delivered returns in excess of the benchmark over the previous three, six and 12 month periods as well as over two years and since inception.

WCM QGG performance 201908

1. Portfolio performance is calculated after investment management and performance fees are paid. 2. Benchmark refers to the MSCI All Country World Index ex-Australia USD Gross Total Return Index reported in AUD and unhedged.

The performance of the three vehicles may vary slightly over the short term but over the medium and long term they will share a strong positive correlation.

August was a volatile month for financial markets triggered by an escalation of the trade dispute between the US and China, rising fears of a ‘no deal’ Brexit and growing concerns about the outlook for global growth. By month-end all major regional equity indices had posted a negative return in local currency terms. The continued decline in government bond yields around the world provided further evidence of investors’ apprehension regarding the global economic outlook.

A weaker Australian dollar limited the impact for local investors with exposure to unhedged portfolios such as the WCM Quality Global Growth strategy. At an individual sector level, it was those sectors considered to be more defensive (i.e. less sensitive to economic growth) such as utilities and consumer staples which fared best.

Strong performers

Despite the abundance of negative news, a number of portfolio holdings made strong absolute gains during the month. Canadian ecommerce group Shopify again led the way, rising by more than 20%. Crown Castle International, America’s largest communication infrastructure manufacturer, French alcoholic drinks firm Pernod Ricard and Essilor, the world’s leading prescription lens provider, all advanced by close to 10%.

Portfolio holdings weighing on performance during the month included US oil services group Schlumberger, Chinese internet services provider Tencent and precision instruments manufacturer Mettler Toledo.

Volatile markets driven by global macroeconomic and geopolitical uncertainties provide challenges for all market participants. The temptation during such times is either to react impulsively to the most recent news or ‘do nothing’ and wait for the uncertainty to dissipate. WCM’s approach is not influenced in any way by prevailing market conditions. The investment team’s focus never waivers from identifying companies with expanding economic moats. This means they are permanently active but never reactive. The portfolio remains close to fully invested at all times.

August provided further evidence of the resilience of a portfolio of high quality (i.e. expanding moat) companies in volatile markets. This has been a feature of the WCM Quality Global Growth strategy since its inception in March 2008.