Go Global with WCM Focused

03/08/2018 5:00 am EST


Robert Carlson

Editor, Retirement Watch

Throughout 2017, I pointed out that growth in Europe and the emerging markets was better than expected and wasn’t factored into market prices, recalls Bob Carlson, editor of Retirement Watch.

I think investors continue to underestimate the potential outside the United States. Even Japan finally seems on the verge of putting its long economic stagnation in the past.

Diversifying globally and in different types of assets has paid off since early 2016. Earnings and revenues are growing faster outside the United States, and the markets still haven’t recognized this.

We are capturing global opportunities through WCM Focused International Growth (WCMRX). It delivered steady gains through 2017. Its only negative month was a 0.21% loss in June. The fund returned 32.17% for the last 12 months.

WCMRX searches for great companies that are growing rapidly and are likely to sustain that growth. Great companies have little or no debt and management that focuses on quality and the long-term.

The companies also should benefit from key global trends, such as the growth of the middle class, increased use of technology, outsourcing and globalization. Another key characteristic should be “moats,” or barriers to competition, such as difficulty of changing providers, economies of scale, a network effect, or legal obstacles.

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WCMRX invests anywhere in the world and doesn’t try to imitate an index. Recently about half the fund was invested in Europe, with 31% in Asia and the rest in the Americas. Though it can invest in any size company, most of its holdings are large global firms. The companies also tend to be in only a few market sectors.

Leading sectors in the fund are technology (18%), health care (17%), consumer discretionary (22%) and consumer staples (15%). The turnover rate is 21%, and the fund owns only 33 stocks. Top holdings recently included Tencent Holdings (TCEHY), Chubb (CB), Reckitt Benckiser (RBGLY) and Nestle (NESN).

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