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Why the WCM Global Growth Fund (ASX:WCMQ) is buying some of the world’s hottest growth shares

Tom Richardson

Many Australian investors will have looked on in awe and a little jealousy at the gangbusters growth of U.S. stock markets since the GFC in 2009.  

The S&P 500 has returned around a compound 13.7% since the start of 2009, and anyone who has beaten the market perhaps by investing in the best tech shares should have returned a compound 15%+ a year since 2009.

Over the long term those kind of returns can really transform your wealth and that’s by doing little more than just beating the U.S. market.

While markets can tank as well go up for now you have the superb growth of the U.S. economy since 2009 on your side as it has thumped every other major market globally in providing double-digit index returns since the GFC.

This is attractive compared to the outlook for Australia that is now printing 1% interest rates on the back of a series of weak economic data points. 

So if you could find a fund that is exposed largely to the U.S. economy and the new wave of fast-growing tech shares you might be onto a winner.

One listed ASX fund that has caught my eye by its heavy investments into some of the potentially leading tech shares of tomorrow is the WCM Quality Global Growth Fund (ASX: WCMQ).

Its run by the group formerly known as Contango Asset Management and is backed by popular business personality Peter Switzer. 

It’s also returned an annualised 15.64% since its inception, versus 4.81% for its benchmark the MSCI World Index.

The fund’s investment management team (WCM) is based out of California, USA, and has a long and successful track record of managing money. 

In particular 3 of the fund’s top 10 holdings caught my eyes as you won’t find many (if any) other managed funds on the local market gong overweight on these kind of growth shares. 

Shopify Inc. (NASDAQ: SHOP) is the fund’s largest holding at 4.88% and is a cloud-based online shopping platform that lets online small to medium-sized businesses or entrepreneurs grow sales from home or the office. It’s growing like nuts has a network effect and may perform well into the future. 

Visa Inc. (NYSE: V) will be well-known to all Australians and is another stock with an absolutely superb track record of growth backed up by growing profits, dividends and share buy-backs. Moreover, the future looks bright as developed economies go cashless and wireless payments (i.e. paying for your coffee with a contactless payment) grow. It’s the fund’s second largest holding.

Mercadolibre Inc.  (NASDAQ: MELI) is often described as the Amazon Inc of South America and its share price has marched relentlessly higher on the back of its rapid growth and growing network effect. As an operator in large and fast-growing South American markets its online shopping platform may grow strongly for a long time into the future. 

The fund also has dozens of other leading tech, finance and consumer-facing companies in its portfolio and reports that it only buys companies that it views as having growing competitive advantages. The three companies above arguably fit that bill as well as any in the world.

As such I’d suggest the fund is worthy of further research for anyone looking to escape the soft outlook for the local economy where the banks are likely to have to follow the National Australia Bank Ltd (ASX: NAB) in cutting their dividends, while other traditional blue-chip favourites like AMP Limited (ASX: AMP) and Telstra Corporation Ltd (ASX: TLS) have also cut or scrapped dividends entirely recently. 

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Tom Richardson owns shares of Visa and Amazon

 

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, MercadoLibre, Shopify, Microsoft and Visa. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019