CBIS has added a third institutional manager to its roster of sub-advisers – WCM Investment Management (WCM) has been retained as a third manager for the CUIT International Equity Fund. WCM is based in Laguna Beach, CA, and is known for its expertise in international growth investing.
“By adding WCM to our manager mix on the International Equity Fund,” said John Geissinger, Chief Investment Officer at CBIS, “we believe the trio will be able to improve absolute performance over a market cycle, while seeking a lower risk profile than the Fund currently exhibits.” Jim Mullaney, Director of Equities Research at CBIS also noted, “Our due diligence efforts revealed that adding WCM would likely keep correlation low amongst the managers, and potentially deliver additional downside protection to the Fund given their investment process.”
WCM’s investment philosophy focuses on seeking attractive returns by structuring portfolios “distinct from market indices.” This results in more concentrated portfolios of their best ideas. “We like that they are benchmark agnostic, meaning they do not try to mimic a benchmark,” said Geissinger. “While their portfolios tend to have a relatively small number of holdings (around 35), that makes a great fit for what we are trying to accomplish with our manager-of-managers program – blending together different investing styles to achieve the characteristics we want for our clients.”
WCM doesn’t rely on Wall Street reporting for their research, opting instead for independent sources for analysis of individual companies and trends including research through their network, independent research firms, industry publications, financial media, and news events. When looking for investment candidates, their time horizon is typically 3-5 years and each company must possess the following attributes:
1. Moats: businesses with durable and growing competitive advantages; industry leaders
2. Culture: one that values great people to help sustain the moat, that are empowered and engaged, possess visionary management
3. Tailwinds: businesses benefiting from long-lasting global trends and sound business strategies
4. Valuation: growth companies at fair prices to provide a margin of value
WCM also considers how a company fits their portfolio from traditional perspectives such as sector/industry diversification and country/currency diversification, and additionally from the perspectives noted above such as tailwinds (e.g., demographics, global commerce, outsourcing, the growing global middle class, proliferation of technology) and competitive advantage types (e.g., economies of scale, switching costs, network effect, legal or regulatory). Their resulting portfolios have delivered competitive performance over the past decade. “The firm’s downside market performance in particular was a key factor in our decision to add them to the CUIT International Equity Fund mix,” said Mullaney.
The anticipated weighting within the CUIT International Equity Fund is below – WCM will begin managing assets for the Fund on September 23, 2015.
WCM 30%
Principal Global Investors 30%
Causeway Capital Management Causeway 40%
Learn more about CUIT International Equity Fund.