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Active Quantitative Equity (AQE)

Fund Update – October 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


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.