Focused Growth Approach of WCM Investment Management
Members of WCM’s investment team explain why two overlooked elements—moat trajectory and corporate culture—are the keys to uncovering the best long-term, global growth opportunities.
This combination, WCM believes, enables them to seek long-term excess returns and mitigate downside risk for their concentrated portfolios – whether in emerging markets, global equities or international small caps.
Focused Growth Approach
WCM’s bottom-up investment approach seeks to identify companies with attractive fundamentals, such as low or no debt, rising returns on invested capital, and reasonably predictable free cash flow generation. The team focuses on assessing the trajectory of a company’s competitive advantage (“economic moat”) and the alignment of its corporate culture with this economic moat.
Businesses with durable and growing competitive advantages.
Great people, empowered and engaged, define success.
Businesses benefiting from long-lasting global trends.
Only best ideas; outperform with controlled risk.
Great growth companies at fair prices contribute to margin of safety.
WCM feels strongly about the correlation between corporate culture and investment returns and has a dedicated business culture analyst who works closely with business analysts and portfolio managers. Their culture analysis focuses on finding corporate cultures that foster behaviors beneficial to the company’s competitive edge, that display adaptability in the face of internal and external challenges, and that permeate the organization at all levels.
Overall, the firm’s highly selective equity process, with a minimum time horizon of 3–5 years, includes the criteria shown in the above graphic. Also, risk control is systematic and built into every aspect of the WCM process. This helps to ensure portfolios participate to a much lesser degree when markets decline.
WCM’s Emerging Markets strategy follows the firm’s bottom-up, fundamental growth approach to seek companies strengthening their competitive advantages (moats), building superior, moat-complementary corporate cultures, and benefiting from what WCM believes are some of the strongest global tailwinds. “Emerging markets are full of opportunity and rapid progress, brimming with innovative companies that appear poised to create tremendous value over the coming decades,” said Mike Trigg, Portfolio Manager and Business Analyst.
Key factors included in WCM’s approach to emerging market growth opportunities:
Consider WCM’s high active share, concentrated emerging market equity strategy:
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This material is provided for informational purposes only and should not be construed as investment advice. The analyses, opinions, and certain of the investment themes and processes referenced herein represent the views of the portfolio managers as of February 2020. These are subject to change. There can be no assurance that developments will transpire as forecasted. Actual results may vary.
MSCI Emerging Markets Index is an unmanaged index that is designed to measure the equity market performance of emerging markets.
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RISKS: The fund invests primarily in shares of emerging market companies. Investments in equities may be subject to large price fluctuations. The fund is subject to specific risks, including Emerging Markets risk: Funds investing in emerging markets may be significantly affected by adverse political, economic, tax or regulatory developments. Investing in emerging markets may not provide the same degree of investor protection or information to investors as would generally apply in major securities markets. In addition, exchanges in emerging markets may be very fluctuating. Finally, funds may not be able to sell securities quickly and easily in emerging markets. Portfolio Concentration risk: Funds investing in a limited number of securities may increase the fluctuation of such funds’ investment performance. If such securities perform poorly, the fund could incur greater losses than if it had invested in a larger number of securities. Derivatives/Counterparty risk: Funds may enter into listed and unlisted derivative contracts in order to have an exposure to underlying assets or to protect their direct assets. Payments on these contracts vary with changes of the value of the underlying assets. These contracts may cause the funds to have a higher market exposure than they would have otherwise, which may in some cases increase losses. Unlisted contracts are agreed with a specific counterparty. If the counterparty goes into liquidation or fails or defaults on the contract, the fund could suffer a loss. Because they are not listed, these contracts can be difficult to price. Smaller Capitalization risk: Funds investing in companies with small capitalizations may be particularly sensitive to wider price fluctuations, certain market movements and less able to sell securities quickly and easily. An investor’s capital will be at risk; you may get back less than you invested. Please refer to the full prospectus for additional details on risks.