Fund Update – October 2020

State Street Australian Equity Fund


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.