Last month we purchased Fidelity Limited Term Bond (FJRLX) in our model portfolio. Part of our strat...
WCM: Focused on Quality & Growth
05/10/2017 2:50 am EST
We’re invested in global growth stocks through WCM Focused International Growth (WCMRX). This is another fund that seeks to own the stocks of a few quality companies. The fund looks for high, sustainable growth, says Bob Carlson, editor of Retirement Watch.
First, the analysts screen for companies that have high growth rates and carry little or no debt. Then, they dive deeply into the companies to determine which are the few who appear able to sustain that growth for years and merit inclusion in the portfolio.
Quality management is, of course, important. So are two other key features. The fund wants a company to benefit from one of the global long-term trends it has identified. These include changing demographics, an expanding global middle class, increased use of technology and greater outsourcing.
Some kind of moat, or protection, for the business also is important. The protection could be legal or regulatory. Other protections include difficulty for customers to change to other suppliers, unique products or services and economies of scale.
The strategy has paid off over both the long term and short term. The fund is among the top performers in its category over most periods, according to Morningstar. In the last four weeks, the fund is up 2.46% and it has returned 10.73% for the year to date.
Because of its focus on growth, the fund tends to be concentrated in a few sectors: technology, 21%, consumer cyclical, 18%, and healthcare, 17%. The fund is invested 23% in the Americas, 50% in Europe and 27% in Asia. Almost 17% of the fund is in emerging economy stocks.
The fund owns 32 stocks and has 41% of the fund in the 10 largest positions. The top positions are Taiwan Semiconductor (TSM), Chubb (CB), CSL (CSL), Reckitt Benckiser (London: RB) and Canadian Pacific Railway (CP). The annual turnover is 26%.
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