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Active Quantitative Equity (AQE)

Fund Update – June 2023

2 min read

Australian equities rallied over June, as investors shrugged off recession fears amid a local retail spending rebound. The RBA hiked policy rate by another 25bps during the month to 4.1%1, leading to a sell-off in longer term bond yields. From a sector perspective, Materials was the best performer with a relatively broad rally across iron ore, coal, lithium and steel names. On the other hand Health Care lagged largely due to a lower than expected FY24 guidance from CSL. Returns from a factor perspective were relatively muted, Value and Sentiment themes were slightly positive while Quality themes were negative.


The State Street Australian Equity Fund outperformed the S&P/ASX 300 Index during June2. Sector wise, good stock picking within Industrials (Mcmillan Shakespeare and Aurizon) and Health Care (not holding CSL) was the biggest contributor towards relative performance. Conversely, our lower than benchmark exposures to Financials (not holding big 4 banks and Macquarie Group) and Metals & Mining (underweight BHP) were the key relative detractors.

Notable changes during the month:

We implemented a small portfolio turnover in June, marginally increasing our Financials exposure via mortgage insurer Helia Group on the back of strong margins (lower than expected claims), upward trending sentiment measures and attractive valuations. We also marginally upweighted our Discretionary exposure via Super Retail, which has been a Covid beneficiary with strong momentum, attractive quality and valuation metrics. Purchases were funded by reducing our exposure to consumer packaging business Amcor, with the company experiencing a deterioration in its sentiment scores as outlook for growth becomes more challenging.