Active Quantitative Equity (AQE)

Fund Update – May 2023

19 June 2023 2 min read

Australian equities fell in May, as the RBA's hawkish tone resumed and concerns lingered around US lawmakers intentions on the country's debt ceiling. The RBA surprised the market with a 25bps hike during the month, while the Fed hiked by the same amount. From a style perspective, Growth stocks outperformed Value stocks, driven by strong returns from Technology. At the sector level, Australian Technology names rose alongside their US counterparts. On the other hand, Discretionary was the worst performing sector – driven by Wesfarmers as they called out consumer pressure at their investor day while smaller retailers signalled a weakening in consumer spending.

Attribution:

The State Street Australian Equity Fund performed in-line with the S&P/ASX 300 Index during May.¹ Sector wise, good stock picking within Industrials (Fletcher Building and Aurizon) and Discretionary (being underweight Wesfarmers) were the biggest contributor towards relative performance. Conversely, negative stock selection within Real Estate (Vicinity Centres) and having a higher than benchmark exposure to Staples were the key relative detractors.

Notable changes during the month:

During the month of May, we marginally increased our Discretionary exposure via Super Retail, funded by slightly reducing our exposure to Telstra and Brambles (both have now reached their upper weight limit in the portfolio). The upweight in Super Retail was driven by the stock’s strong momentum signals, and its attractive valuations – which looks cheap relative to the broader index.

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Footnotes

Disclosure

Issued by State Street Global Advisors, Australia Services Limited (AFSL Number 274900, ABN 16 108 671 441) (“SSGA, ASL”). Registered office: Level 14, 420 George Street, Sydney, NSW 2000, Australia · Telephone: +612 9240-7600 · Web: www.ssga.com. State Street Global Advisors, Australia, Limited (AFSL Number 238276, ABN 42 003 914 225) (“SSGA Australia”) is the Investment Manager.

For Institutional / Professional Investors use only.

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.

This material should not be considered a solicitation to apply for interests in the Funds and investors should obtain independent financial and other professional advice before making investment decisions. There is no representation or warranty as to the currency or accuracy of, nor liability for, decisions based on such information.

All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.

This information should not be considered a recommendation to buy or sell any security or sector shown. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor. It is not known whether the securities or sectors shown will be profitable in the future. Characteristics are as of the date indicated, subject to change, and should not be relied upon as current thereafter.

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.

References to specific company stocks should not be construed as recommendations or investment advice. The statements and opinions are subject to change at any time, based on market and other conditions.

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