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Systematic Equity Active (SEA)

Fund Update – January 2024

5 min read

Australian equities rose modestly in January, largely driven by non-resource stocks as investors are hopeful for a soft landing. While large-cap growth names led returns in the US, in Australia, large cap value and growth segments provided comparable returns during the month. From a sector perspective, Energy was the top performer – led by large cap coal miner Whitehaven Coal and Uranium names such as Boss Energy in the small cap space. Financials were the second best performing sector, led by insurance stocks – which rebounded after a streak of poor performance towards the end of 2023. Metals & Mining was the worst performing sector, driven by weak China sentiment and a stronger US dollar.


The State Street Australian Equity Fund underperformed the S&P/ASX 300 Index during January1. Sector wise, being structurally underweight Financials (big 4 banks) and negative stock selection within Health Care (not holding CSL) were key detractors. Conversely, being underweight Metals & Mining (BHP) and good stock picking within Industrials (Smartgroup) were key contributors towards relative performance.

Notable changes during the month:

We implemented a small amount of turnover in January, resulting in a slight increase in overall exposure to IT and funded by a small decrease in Industrials and Materials. Within tech, we increased our position in Data#3 – driven by its low risk profile, strong trading results and a well-rounded mixture of strong sentiment, high quality and high valuation scores. At the same time, we continued to sell down our exposure to toll road operator Atlas Arteria due to expensive valuations, weak revenues and falling investor sentiment – particularly as US operating conditions remain more difficult. We also decreased our exposure to BHP on the back of falling sentiment scores and lower expected returns – predominately driven by lower forecasted Coal production and higher forecasted operating costs.