Global equities rose in April adding to first quarter’s strong performance as markets focused on earnings and company guidance that were better than expected, rather than the clear evidence of economic slowing combined with inflation that remains elevated. From a sector perspective, all sectors performed well, with Consumer Staples and Energy leading the board.
Attribution:
The State Street Global Equity Fund underperformed the MSCI World ex Australia Index during April.1 At the factor level, stock selection was negatively impacted by performance of our Sentiment factor. From a country and sector perspective, negative stock selection within US Energy and being overweight Materials sector in Norway were key detractors. On the other hand, good stock picking within US Consumer Discretionary and US Industrials were key contributors towards relative performance. Currency hedging detracted -1.0% during the month.
Notable changes during the month:
During April, we made minor adjustments to the overall portfolio with the aim of improving expected risk-adjusted returns. The rebalance involved slightly increasing our exposure to select names in select names in the Capital Goods industry within Industrials (notably BAE Systems plc on the back of improving Sentiment and Value scores) and German Automobile Manufacturing company Bayerische Motoren Werke AG Pref, on the back of strong Value and Quality scores. At the same time, we reduced our exposure to select Financial Services companies (UBS Group AG) and Oil & Gas Refiner Valero Energy Corporation – driven largely by falling Sentiment scores.