Active Quantitative Equity (AQE)

Fund Update – December 2022



Australian equities outperformed broader developed markets in December, though were still down -3.2% as investors responded to the Reserve Bank of Australia’s (RBA) 25bps hike to 3.10%. In a volatile year for global equities, the S&P/ASX 300 Index fell just -1.8%, which was well ahead of the -18.1% decline in the S&P 500 Index (local). Commodity prices increased across the board during the month, supported by news of stabilisation in the China property market and government infrastructure stimulus. All sectors ended the month in the red, with Discretionary and IT falling the most and Materials and Utilities falling the least.

Attribution:

The State Street Australian Equity Fund outperformed the S&P/ASX 300 Index during December.1 Sector wise, good stock picking within Communication Services (Spark NZ, Chorus and Telstra) and Energy (New Hope) were the biggest contributors towards relative performance. Conversely, not having an allocation to Gold stocks was the only detractor during the month.

Notable changes during the month:

During the month of December, we marginally increased our weight in Staples and Industrials while trimming our weight in Real Estate and Communication Services. For example, our buying of Treasury Wine Estates (TWE) was driven by improvements in Sentiment and overall momentum scores in recent months. TWE has been benefiting from positive premiumization trends, reallocation away from China, improved US performance and supply chain optimization cost benefits. This trade was funded by trimming our holdings in Rio Tinto, Spark NZ and Metcash.