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Fund Update – August 2020
State Street Global Equity Fund
Global markets recorded another solid rise in August 2020 on vaccine hopes and US Technology. Most sectors rose, with Consumer Discretionary and Technology outperforming, while Utilities, REITs and Energy underperformed. A defining factor of 2020 has been the extraordinary performance of the Technology sector. IT, along with Discretionary that has a material Technology component, has powered much of this year’s gains in global markets, which has made for a narrow rally. Not only did the sector outperform in the February-March drawdown, it has dramatically outperformed in the recovery. The NASDAQ is up an eye-watering +32% YTD (USD).
The State Street Global Equity Fund underperformed its benchmark during the month as the technology rally reached new highs. From a sector perspective, negative stock selection within IT (not holding Apple) and Communication Services (not holding Facebook) were key detractors. On the other hand, not holding any energy names was a key contributor towards relative performance. Currency hedging was also a major contributor towards relative performance, adding +1.7%.
Year to date, underperformance has been concentrated in two cohorts – the very expensive and the very cheap. The strategy aims to minimise total portfolio volatility and as part of achieving that objective we have been relatively underweight the most expensive, high sentiment segments of the market. Impacts of the Coronavirus and central bank interventions have further exacerbated certain trends that favoured the most expensive, high sentiment (high growth) stocks; which in turn characterises our relative underperformance year to date. Our current positioning in reasonably valued, higher quality stocks with positive sentiment reflects our strong conviction that these market imbalances will inevitably revert and that a risk-aware strategy requires a balanced view of return drivers.
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.
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, 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.
Source: Bloomberg Finance, L.P., SSGA as at 31 August 2020. Past performance is not a reliable indicator of future performance. This information should not be considered a recommendation to buy or sell any security or sector shown. 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.
Investing involves risk including the risk of loss of principal. Risk associated with equity investing includes stock values which may fluctuate in response to the activities of individual companies and general market and economic conditions.
Past performance is not a reliable indicator of future performance. This information should not be considered a recommendation to buy or sell any security or sector shown. 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.
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. The Portfolio may, but will not necessarily, invest in currency exchange contracts or other currency-related transactions (including derivatives transactions) to reduce exposure to different currencies. These contracts may reduce or eliminate the benefit that the Portfolio may experience from favorable currency fluctuations.
The MSCI World ex Australia Unhedged (AUD) are a trademark of MSCI Inc. MSCI indices are the exclusive property of MSCI Inc. ("MSCI"). MSCI and the MSCI index names are service mark(s) of MSCI or its affiliates and have been licensed for use for certain purposes by State Street Global Advisors ("SSGA"). The financial securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such financial securities. No purchaser, seller or holder of this product, or any other person or entity, should use or refer to any MSCI trade name, trademark or service mark to sponsor, endorse, market or promote this product without first contacting MSCI to determine whether MSCI's permission is required. Under no circumstances may any person or entity claim any affiliation with MSCI without the prior written permission of MSCI.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA Australia’s express written consent.
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Adtrax Code: 3403257.1.1.ANZ.RTL
Expiry: 31 August 2021