WCM GLOBAL GROWTH LIMITED — Net Asset Value 2021

Mar 7, 2021

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WCM GLOBAL GROWTH LIMITED (ASX:WQG) INVESTMENT UPDATE AND NTA STATEMENT 28 Feburary 2021

PORTFOLIO UPDATE

PERFORMANCE1	PORTFOLIO	MSCI ACWI (ex-AU)	VALUE ADDED3
1 Month 3 Months	-0.25% -0.67%	1.29% 1.59%	-1.54% -2.26%
6 Months	8.34%	8.30%	0.04%
1 Year	22.38%	10.08%	12.30%
3 Year_(p.a.)_	21.28%	11.28%	10.00%
Inception2_(p.a.)_	19.26%	11.74%	7.52%

The portfolio delivered a return of -0.25% during the month, below the benchmark MSCI All Country World Index (exAustralia) return of 1.29%. The portfolio has delivered returns in excess of the benchmark over the previous six and 12-month periods, as well as over three years and since inception.

Global equity markets continued to reach new highs in early February as US president Joe Biden and treasury secretary Janet Yellen maintained pressure on Congress to pass their proposed US$1.9tn fiscal stimulus package. Investors also welcomed news about the pace of the COVID-19 vaccine rollout and new case numbers in the US dropping below 100,000 for the first time in three months. However, a sudden sharp rise in global bond yields dampened this investor optimism, leaving markets off their highs by month end. The yield on the US 10-year Treasury reached a 12-month high of 1.6% with concerns growing around the potential impact on global inflation from the expected strong economic rebound in 2021. This increase in interest rates was the catalyst for the underperformance of emerging relative to developed markets and quality and growth factors relative to value. At an individual sector level energy and financials led the way with the lagging sectors including healthcare and consumer staples. The Australian dollar was stronger during the month reducing returns for unhedged portfolios.

Notes : 1. Portfolio return is calculated before expenses and after investment management and performance fees are paid. Performance includes the reinvestment of dividends and income. 2. Inception date is 21 June 2017. 3. Value added equals portfolio return minus benchmark return.

NET TANGIBLE ASSETS1 (PER SHARE)	28 FEB 2021	31 JAN 2021
NTA before tax $1.637 $1.636
NTA after tax and before tax on unrealised gains $1.618 $1.618
NTA after tax $1.462 $1.461
Month end closing share price $1.580 $1.515

Notes: 1. NTA is calculated after all fees and expenses and incorporates all company assets including WQG’s operating bank account.

The portfolio’s financial sector holdings were amongst the positive contributors to returns in February. The technology and industrial sectors also provided some names which outperformed the market. On the flip side, healthcare and consumer staples were relatively weaker. US private bank and wealth management services provider, First Republic Bank has been a core financial sector holding in the WCM Quality Global Growth portfolio since March 2017. It focuses on the affluent in attractive markets and does not try to be all things to all people. WCM views it as a service company whose product happens to be banking. Its extraordinary culture and service orientation distinguishes it as one of the few high quality, high organic growth stories in banking.

KEY DETAILS
Report Date ASX Code	28 February 2021 WQG
Investment Adviser Benchmark	WCM Investment Management MSCI All Country World Index (ex- Australia) with gross dividends reinvested reported in Australian dollars and unhedged
Number of stocks	20-40
Maximum cash position	7%
Stock universe	Global (ex-Australia)
Portfolio size	$285.19m
Shares on issue	174.90m
Management Fee	1.25% (ex-GST)
Performance Fee1	10% (ex-GST)
Hedging	Unhedged

The big question investors are asking at present is whether the stock market could be dragged down by an increase in bond yields caused by rising inflation pressures. Higher price to earnings multiple ‘growth’ stocks are considered particularly vulnerable to an increase in interest rates, as they reduce the value of their future cash flows. The WCM Quality Global Growth strategy has exposure to several higher multiple stocks. However, it also has meaningful exposure to companies which will benefit from a rebound in economic activity and are less sensitive to an increase in interest rates. Examples of these holdings include: paint and coating manufacturer Sherwin Williams; fluid handling systems firm Graco; and Swedish multinational industrial company Atlas Copco. This exposure to cyclical growth companies is a key element of WCM’s all-weather approach to portfolio construction.

Notes: 1. Performance Fee is 10% (ex-GST) of the Portfolio’s outperformance relative to the benchmark plus Management Fee and subject to high water mark. Maximum fee is capped at 0.75% of the closing market value of the Portfolio in each financial year.

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HOW INVESTMENTS ARE CHOSEN FOR THIS PORTFOLIO WCM’s two key criteria for any company to be considered for inclusion in the WCM Quality Global Growth Strategy are 1) a rising competitive advantage (or expanding economic moat); and 2) a corporate culture that supports the expansion of this moat. WCM believes the direction of a company’s economic moat is of more importance than its absolute width or size.

Its research is therefore focused on identifying those companies with a positive moat trajectory as measured by a rising return on invested capital (ROIC) as opposed to those with a large but static or declining moat. WCM also strongly believes that corporate culture is a key determinant of a firm’s ability to achieve a consistently growing moat. WCM has developed a proprietary approach to analysing corporate culture and has investment team members solely dedicated to this part of their process.

WHO MANAGES THE PORTFOLIO?

WCM is a California based asset management firm specialising in active global and emerging market equities.

Founded in 1976, the business is majority employee owned and manages over A$106.7 billion of assets* on behalf of institutional and retail investors around the world including Australia.

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PAUL BLACK

CEO & Portfolio Manager WCM Investment Management

WCM GLOBAL GROWTH LIMITED ACN 617 281 268 Level 6, 10 Spring Street, Sydney NSW 2000

T: 1300 001 750 E: invest@contango.com.au W: www.contango.com.au/funds/wqg

REGIONAL MARKETS ALLOCATION

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Other
Europe 1%
14%
Asia Pacific
18%
Americas
67%
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	TOP TEN PORTFOLIO HOLDINGS** MercadoLibre	WCM GLOBAL GROWTH (%) 5.97
	Taiwan Semiconductor	5.01
	Shopify	4.72
	Stryker Corp.	3.88
	Tencent Holdings	3.66
	West Pharmaceuticals	3.64
	LVMH (Moet Hennessy Louis Vuitton)	3.38
	Visa Inc.	3.25
	First Republic Bank	3.18
	Amphenol Corp.	3.06
	Total	39.75
	SECTOR BREAKDOWN	WCM GLOBAL GROWTH (%)
	Information Technology	27.90
	Health Care	18.49
	Consumer Discretionary	15.13
	Financials	11.81
	Industrials	10.74
	Consumer Staples	6.07
	Materials	4.76
	Communication Services	3.66
	Cash	1.44
	Total	100.00

DISCLAIMER: Past performance is not a predictor of future returns. This update has been prepared for information purposes only related to the underlying investment portfolio. The NTA figures provided in this document are unaudited and approximate. This document does not contain investment recommendations nor provide investment advice. Investors in LICs should understand the distinction between Investment Portfolio Performance, NTA Performance and Share Price return. Contango International Management Pty Ltd ( CIM ) ACN 617 319 123 Corporate Authorised Representative (CAR No. 1254169) of Switzer Asset Management Limited (AFSL No. 312 247) is the investment manager of WQG. Neither WQG, CIM nor their respective related entities, directors or officers guarantees the performance of, or the repayment of capital or income invested within WQG or any associated product. You are strongly encouraged to obtain detailed professional advice and to read any relevant offer document in full before making any investment decision. WQG may not be suitable for your investment needs. This is not an offer to invest in any security or financial product. © 2018 Contango Asset Management Limited. WCM AUM data in AUD at 31 December 2020. *The securities identified and described 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. More information on contributors and detractors including calculation methodology and contribution of remaining holdings can be obtained by contacting invest@contango.com.au.