Active Quantitative Equity (AQE)

Fund Update – April 2022



Australian stocks outperformed their global counterparts in April 2022, despite declining 1%.1 The key driver of the decline was a more Hawkish Fed, which pushed up real yields and pressured equity valuations. There are also rising global growth concerns as Central Banks tighten into a slowing cycle. Defensive sectors led as investors sought safety, with Staples and Utilities outperforming. Energy also continued to outperform on the back of supply disruptions. On the other hand, Technology was the worst performer as it still has the highest valuations and is impacted most by the rise in real yields.

Attribution:

The State Street Australian Equity Fund outperformed the S&P/ASX 300 Index during April (net).2 The outperformance was largely driven by good stock picking within Discretionary (Wesfarmers and underweight Aristocrat) and Energy (New Hope). On the other hand, negative stock selection within Metals & Mining ex Gold (Sandfire Resources) and Financials (not holding CBA and NAB) were key detractors from relative performance.

Notable changes during the month:

During the month of April, we made some minor adjustments as part of regular rebalancing. For example, reducing our weight in Brambles which funded some of our purchases in Rio Tinto. Rio Tinto is currently exhibiting better expected risk-adjusted returns and providing better overall diversification for the portfolio.