Active Quantitative Equity (AQE)

Australian stocks slightly outperformed global markets in the volatile month of November 2021. Materials was the best performing sector during the month, led by iron ore stocks. The gains in iron ore stocks were likely driven by increasing expectations of China easing and investors finding value after the mining sell-off since August 2021. Defensive sectors also performed strongly, with solid gains for Communication Services, Staples, Real Estate and Utilities. Energy and Financials were the worst performing sectors as the spread of Omicron is expected to be a drag on already falling oil and coal prices; while declining bond yields added to margin headwinds for the banks.
 
Attribution:
The State Street Australian Equity Fund outperformed the S&P/ASX 300 Index (net of fees) during November. The outperformance was largely driven by good stock picking within Financials (not holding big 4 banks, Janus Henderson) and our underweight position in Energy (not holding Woodside and Santos). On the other hand, having a lower than benchmark weight in Miners (underweight BHP) and negative stock selection within Real Estate (not holding Goodman Group) were key detractors.
 
Notable changes during the month:
During the month, we purchased Graincorp and GPT Group on the back of strong expected return and attractive risk measures. At the same time, we sold out of our position in Mineral Resources (thereby reducing overall exposure to Miners), considering its elevated price volatility and less attractive earnings forecasts.
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