The S&P/ASX 300 Index rose +1.9% in October 2020, outperforming developed market equity returns. As the European and US second waves intensify and geopolitical risks mount (US election, Brexit, trade), the picture down under was, in contrast, looking up. Importantly, confidence began to rise amongst consumers and corporates, which is manifesting in improved earnings and dividend expectations. During the month, IT, Financials and Staples outperformed while Industrials and Utilities underperformed. In contrast to global themes, Value stocks outperformed Growth stocks in October, a move that was driven principally by the rally in Australian banks.
The State Street Australian Equity Fund underperformed its benchmark during October after fees. From a sector perspective, our lower than benchmark weight in Financials (not holding big 4 banks) and negative stock selection within Industrials (Brambles and Aurizon) were key detractors. On the other hand, good stock picking within Health Care (Fisher & Paykel and Resmed) and Staples (Coca-Cola and Coles) were key contributors towards relative performance. YTD, the fund’s outperformance can be largely attributed to our lower than benchmark weight in Financials (not holding big 4 banks, AUB Group) and good stock picking within Health Care.
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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, available at www.ssga.com, before deciding whether to acquire or continue to hold units in the Funds.
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Source: Bloomberg Finance, L.P., SSGA as at 31 October 2020. Past performance is not a reliable indicator of future performance. This information should not be considered a recommendation to buy or sell any security or sector shown. 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.
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