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Active Quantitative Equity (AQE)

Fund Update – November 2023

2 min read

Australian equities rose in November, lifted by a strong rebound in Healthcare stocks. Softer economic data, ongoing disinflation and expectations of peak interest rates in Australia saw a sharp fall in bond yields – reversing the valuation headwinds of recent months. From a sector and industry perspective, the fall in bond yields were a major tailwind for the top two performing sectors Health Care and Real Estate. On the other hand, Energy was the worst performing sector; driven by a decline in oil and gas prices that has occurred despite ongoing geopolitical conflict in the Middle East


The State Street Australian Equity Fund underperformed the S&P/ASX 300 Index during November.1 Sector wise, being underweight Health Care names (CSL) and overweight Staples (Coles, Metcash) were key detractors from relative performance. Conversely, good stock picking within Energy (Woodside) and Metals & Mining ex Gold (South32) were key contributors.

Notable changes during the month

We implemented a small amount of turnover in November, resulting in a slight increase in overall exposure to Staples and Industrials, funded by small reductions in Real Estate. Within Staples, we once again increased our weight in agribusiness Graincorp on the back of highly attractive quality, valuation and risk scores. At the same time, we reduced our exposure to shopping centre operator Vicinity Centres - which is looking increasingly risky due to rising debt costs, cap rates and sharply slowing quarterly sales growth (a key leading indicator for medium term operating income). These have been translating to notably lower sentiment scores and stock prices.