Active Quantitative Equity (AQE)

Fund Update – October 2023

23 November 2023 2 min read

Australian equities struggled in October, driven by a spike in geopolitical fears and PE compression on the back of higher for longer interest rates. Australian 10-year bond yields rose to 4.92%, amid expectations of higher rates for a longer period being needed to combat persistent inflation, which remains above the RBA target for a record 10 quarters now. From a sector and industry perspective, Tech and Health Care were the worst performing sectors, while Gold and Utilities outperformed. Despite the rise in real yields (which is normally bad for Gold), Gold stocks rallied following escalation of the Middle East conflict

Attribution:

The State Street Australian Equity Fund outperformed the S&P/ASX 300 Index during October.¹ Sector wise, good stock picking in Industrials (Mcmillan Shakespeare) and Financials (Helia Group, Medibank Private) were the key contributors towards relative performance. Conversely, our lower than benchmark exposure to Gold and overweight in glass and aluminum manufacturer Orora were the key detractors.

Notable changes during the month:

We implemented a small amount of turnover in October, resulting in a slight increase in overall exposure to Industrials and Financials, funded by small reductions in Utilities. We once again increased our weight in infrastructure services provider Ventia Services on the back of consistent earnings, YoY growth, attractive quality and valuation scores. At the same time, we reduced our exposure to energy provider APA Group as Sentiment scores have deteriorated over the past few months, making its risk-reduction characteristics less appealing.

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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 Statement 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.

Investing involves risk including the risk of loss of principal.

Diversification does not ensure a profit or guarantee against loss.

Equity securities may fluctuate in value and can decline significantly in response to the activities of individual companies and general market and economic conditions.

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Expiry Date: 30/11/2024