What you’re about to read could be seen as a conflict of interest for me so I’m fessing up from the start but it’s a story worth telling.
Over the past few years, a US-based fund manager WCM has presented at our Switzer conferences. These guys came to Australia with a very impressive reputation and were linked to the fund manager Contango Asset Management (CGA) that managed my listed Switzer Dividend and Growth Fund or SWTZ.
By an unexpected set of circumstances, CGA bought SWTZ and I became a substantial shareholder of CGA. And my son, Marty, was asked by the Contango board to become CEO. By the way, I’m not on the board and I didn’t have any say on what the board decided about the selection of the CEO.
So that’s my link to WCM, which has two listed products on the ASX. One is a listed investment company called WQG. The other is an actively managed exchange traded fund with the ticker code WCMQ.
And yep, I’ve invested in their funds purely because they have a great story on how they invest and their performance has been impressive.
The table below shows you what they’ve achieved:
The first line shows what the underlying US-based fund has done compared to the Benchmark. And the Value Added line is the difference between WCM and the Benchmark.
Of course, history is no proof that this performance continues into the future but it is noteworthy.
I was keen to see how these two funds did during the Coronavirus crash and rebound and the following charts tell that story.
Objectively, I have said before that I’m impressed with companies or funds that can be about where they were before the crash. And WQG has done that
And what about the ETF version of WCM i.e. WCMQ?
The chart below shows that, like the LIC version of the fund, WCMQ is up on a six-months basis and that’s why Yahoo Finance portrays the chart in the colour green.
As I’ve said, past performance is no guarantee that the fund managers will be able to keep up their good long-term performance.
So what is their investment style?
Co-CEO Paul Black has explained that they look for best-of-breed businesses in the world, which have what they call “growing moats”. Warren Buffett made famous the idea of investing companies with protective ‘moats’ around the profits and the business, which means a competitive edge can be defended.
The WCM guys have simply said it’s even better to find businesses where the moat or competitive edge is growing. That’s what they look for when they scan the world for the best businesses they can find. They add another dimension relating to a company’s culture – they want companies with a superior culture.
Black has told me they don’t get too stressed about recessions and stock market crashes because they usually have companies that do well in good and bad times!
Of course, they’d prefer non-Coronavirus infected economies and stock markets, but given what the charts are currently saying, the market certainly believes in their investment approach.
That said, and I repeat this, past performance is no 100% guide to what might happen in the future. It’s why I am a diversified investor with at least 20 different investments in my SMSF.
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