2019 Asset Manager Awards: WCM Focused Growth International ADR Strategy

The portfolio team identifies and invests in companies with strong competitive advantages over peers and a trajectory for these economic moats.

Jon Tringale Title: Client Portfolio Manager Years with present firm: 4 Years in financial services: 11 Investment/asset class focus: International/Global Equities

Asset Management Firm: WCM Firm’s headquarters: Laguna Beach, California Year firm was founded: 1976 Number of employees and/or partners: 51 employees, 28 of whom are owners Assets under management/advisement as of Dec. 31, 2018: $29.8 billion

WCM Investment Management has a long track record of outperforming the MSCI All Country World Index excluding the U.S., which it did by 8.25% in 2018, putting it in the top 3% of its peer group.

Envestnet says its high opinion of the Focused Growth International ADR Strategy is tied to “its differentiated investment process and impressive team culture,” making it “a top option for investors looking for a concentrated, benchmark agnostic, aggressive global growth manager.”

The portfolio team’s aim is to identify and invest in companies with a strong competitive advantage over peers (i.e. an economic moat) and a trajectory for this competitive advantage. The portfolio — which is led by five managers — “has a large-cap bias as well as a quality and growth tilt and currently has roughly 14% invested in emerging markets,” the Envestnet analysts explained. Also, its lower beta orientation boosted returns last year, which was a volatile one for international markets.

“We’re all about generating excess return over time,” said Jon Tringale, client portfolio manager. “We want to win the investment game, and we try and exploit asset classes where we see inefficiency in order to do that.”

The global equity team includes 15 individuals. “We tend to think small teams work better, and there’s a lot of academic evidence to suggest that it does,” Tringale explained.

“We really believe that to win in the long run, the first objective you have to be able to meet is to protect capital well in down markets. The math just works,” he said. “Every decision we make is really designed first and foremost to protect capital well.”

The team also works with a fairly concentrated portfolio. “We think we have a selection edge, and so we want to concentrate and really own our best ideas,” Tringale explained.

“If you look at consumer discretionary, we had a few luxury names that did very well. In healthcare and technology, there are some big secular tailwinds driving growth in certain parts of the economy, which are still positive when you hear the overall narrative about slowing global growth.”

Last year, economic growth weakened outside the U.S., while earlier the world’s economies were generally considered to be in sync. “We look for areas that have real structural growth that can … power through slowdowns in the macro [economy],” he said, such as healthcare.

“There are two powerful secular growth drivers in healthcare,” according to Tringale. One is the world’s aging population, which increases demand for medical services and supplies.

Another is “tremendous growth in emerging-market healthcare spending,” he says. “We’ve seen large population countries like Brazil and Indonesia pledge to double the amount of their GDP spent on healthcare, which is going to create tremendous opportunity for certain segments of healthcare.”

Companies that support e-commerce, like Shopify of Canada, is another area “that we think is quite intriguing at the moment,” Tringale explained. “We tend not to trade a lot. We really invest in businesses for the long term.”

To find these companies, WCM looks at the businesses’ culture. “We’re talking about the set of values that drives behavior and are looking for a nice alignment with the business model.”

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