August saw positive results for the global market, as the MSCI World ex Australia Index rose +3.1%. Despite increasing signs of COVID-19 resurgence and concerns about US tapering, equity markets rallied on strong earnings and no policy changes from the US Jackson Hole Symposium. US and European economic data were mixed, as the spread of the Delta variant weighed on expectations of further pick-up in economic activity. While the US 10-year bond yield fell 21bps to 1.23% on the back of dovish commentary, we think rising bond yields will remain a key risk that could trigger short term volatilities in equity markets.

The State Street Global Equity Fund outperformed the broader index (MSCI World ex Australia TR Index) in August. Sector-wise, the outperformance was largely driven by good stock picking within Japanese and US Industrials and North American / European Staples (notably in Food Retail). Negative stock selection within Discretionary Retail and Communication Services were key detractors. The strategy’s preference for lower risk stocks detracted value in Japan, but was flat in North America and Europe.