Australian stocks declined (-1.9%) alongside broader global equity markets (albeit to a lesser extent), as inflation fears, rising bond yields, monetary tightening and a host of other worries placed strain on already high market valuations. Energy was the best performing sector as shortages drove up gas, coal and oil prices and investors seemingly put aside their ESG concerns. By contrast, Mining was the worst performer as iron ore prices declined in response to concerns about China’s property market and Evergrande.

The State Street Australian Equity Fund underperformed the benchmark (S&P/ASX 300 Index) during September 2021. The underperformance in September was largely driven by our lower than benchmark exposure to Financials (not holding the big 4 banks) and Energy (not holding Woodside Petroleum and Santos), as well as negative stock selection within Discretionary and Industrials (Brambles). On the other hand, good stock picking within Utilities and Communication Services were key contributors towards relative performance.