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.
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.
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.
1 Source: SSGA as of 31 December 2022. Past performance is not a reliable indicator of future performance. Performance returns for periods of less than one year are not annualized. The performance figures contained herein reflect Total Returns and are provided on a net of fees basis. Performance figures are calculated using end-of-month exit prices and assume the reinvestment of distributions and make no allowance for tax. Net performance figures are after management and transaction costs. Index returns are unmanaged and do not reflect the deduction of any fees or expenses. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income as applicable.
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References to the State Street Australian Equity Fund ("the Fund") in this communication are references to the managed investment schemes domiciled in Australia, promoted by SSGA Australia, in respect of which SSGA, ASL is the Responsible Entity. This general information has been prepared without taking into account your individual objectives, financial situation or needs and you should consider whether it is appropriate for you. You should seek professional advice and consider the product disclosure document and target market determination, available at www.ssga.com, before deciding whether to acquire or continue to hold units in the Funds.
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