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:
WCM’s Select Global Growth Equity strategy follows the same focused growth approach and investment process as all other portfolios the firm manages. It holds around 30 to 50 positions in the portfolio. This selective perspective reflects a belief that exceptional returns can only be achieved by structuring a portfolio distinct from indexes. It also reflects WCM’s belief that they have a demonstrable selection edge. WCM would rather own a lot of a good company than a little bit of an average one.
Rigorous selection process to capture distinct growth opportunities globally:
Consider WCM’s High Active Share, Concentrated Growth Equity Strategies:
WANT MORE INFORMATION?
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 April 2021. 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.
This document may contain references to copyrights, indexes and trademarks that may not be registered in all jurisdictions. Third party registrations are the property of their respective owners and are not affiliated with Natixis Investment Managers or any of its related or affiliated companies (collectively “Natixis”). Such third party owners do not sponsor, endorse or participate in the provision of any Natixis services, funds or other financial products.
The index information contained herein is derived from third parties and is provided on an “as is” basis. The user of this information assumes the entire risk of use of this information. Each of the third party entities involved in compiling, computing or creating index information disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to such information.
The provision of this material and/or reference to specific securities, sectors, or markets within this material does not constitute investment advice, or a recommendation or an offer to buy or to sell any security, or an offer of any regulated financial activity.
Global Emerging Markets Equity Fund 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. 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.
Select Global Growth Equity Fund Risks: The Fund invests primarily in shares of companies located around the world. Regional equity investments may experience large price fluctuations and may be subject to local economic conditions. The Fund is subject to specific risks, including: Stock Connect risk: The Fund may invest in China "A" shares via the Shanghai-Hong Kong Stock Connect and/or Shenzhen-Hong Kong Stock Connect programs which are subject to additional clearing and settlement constraints, potential regulatory changes, and operational and counterparty risks. Geographic Concentration risk: Funds that concentrate investments in certain geographic regions may suffer losses, particularly when the economies of those regions experience difficulties or when investing in those regions becomes less attractive. Moreover, the markets in which the funds invest may be significantly affected by adverse political, economic or regulatory developments. Portfolio Concentration risk: Investments in a limited number of securities may increase the fluctuation of the Fund’s performance. If such securities perform poorly, the Fund could incur greater losses than if it had invested in a larger number of securities. Growth/Value Equities risk: Investments in equities tend to fluctuate more than investments in bonds, but also offer greater potential for growth. The price of equity investments may sometimes fluctuate quite dramatically in response to the activities and results of individual companies, as well as in connection with general market and economic conditions. Additionally, funds may hold equities having either a growth or value bias; prices of the growth bias equities tend to be more sensitive to certain market movements as they are often subject to factors such as future earnings expectations which may vary with changing market conditions, whereas equities with a value bias may continue to be underpriced by the market for sustained periods of time. 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. All investing involves risk, including the risk of loss. The fund is subject to additional material risks. Please refer to the full prospectus for additional details on risks.