April was a weak month for global equities, as rising inflation fears fueled concerns of a slowdown in economic growth. The S&P 500 Index fell 8.7% (local) and the NASDAQ fell 13.2% (local)1, as equity valuations were hit by rising real yields and concerns around central bank tightening into a slowing cycle. Defensive sector performed relatively better, led by Staples and Utilities. Energy also fell less than the market as commodity prices remained elevated. On the other hand, Communication Services, Discretionary and IT were the worst performing sectors.
The State Street Global Equity Fund outperformed the MSCI World ex Australia Index during April (net).2 Low risk / low beta stocks performed strongly in a falling market, and rising interest rates continue to provide tail wind to the performance of cheaper / value names. From a country and sector perspective, being overweight defensive sectors added value. Stock picking was strongest within US Discretionary (which we are underweight), US Health Care (overweight) and having a lower than benchmark exposure to US Tech. At the other end of the spectrum, having no exposure to US Energy and negative stock selection within US Financials were key detractors. The dynamic currency hedging overlay detracted value in April largely due to a strengthening USD (vs AUD).
Notable changes during the month:
During the month, we increase our allocation to select Consumer Staples and Material names as part of regular rebalancing – including Tyson Foods and Newmont Corp which have been exhibiting relatively strong expected return and diversification characteristics. At the same time, we have marginally decreased some of our overweight positions in Health Care – including Merck and AbbVie.
1Source: Bloomberg Finance, L.P., SSGA as at 30 April 2022. Past performance is not a reliable indicator of future performance. 2Source: SSGA as of 30 April 2022. Past performance is not a reliable indicator of future performance. Performance returns for periods of less than one year are not annualized. The performance figures contained herein reflect Total Returns and are provided on a net of fees basis. Performance figures are calculated using end-of-month exit prices and assume the reinvestment of distributions and make no allowance for tax. Net performance figures are after management and transaction costs. 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 as applicable.
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References to the State Street Global 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 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.
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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.
Investing involves risk including the risk of loss of principal.
Equity securities may fluctuate in value and can decline significantly in response to the activities of individual companies and general market and economic conditions.
Currency Risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.
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You should seek professional advice and consider the Product Disclosure Document (PDS) and target market determination, available at www.ssga.com, before deciding whether to acquire or continue to hold units in the Funds.
You can access our PDS online or by calling us. The offer made in our PDS is available to persons receiving the PDS within Australia and applications from outside Australia will not be accepted. Past performance is not a reliable indicator of future performance. Investing entails risks and there can be no assurance that State Street Global Advisors will achieve profits or avoid incurring losses.
Investing involves risk including the risk of loss of principal. 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. Performance quoted represents past performance, which is not a reliable indicator of future results. Investment return and principal value will fluctuate, so you may have a gain or loss when shares are sold. Current performance may be higher or lower than that quoted.