Global markets struggled in February 2022, as geopolitical tensions saw investors reposition for an uncertain outlook. The MSCI World ex AU Index fell -5.5% in AUD terms, largely driven by the S&P 500 Index which dropped -3.0% (local)1. The key macro event was the outbreak of war in the Ukraine, as this was a trigger for investors to reduce risk in an environment where growth was already slowing. The Russia-Ukraine war put additional pressure on European equities with European stocks underperforming its global peers through February. In addition, commodity prices moved strongly upward, particularly in Gold which lifted as investors repositioned into safe-haven asset classes. Brent Oil also edged higher as markets reacted to the impacts of sanctions on oil and gas exports. At the sector level, all sectors ended the month in red aside from Energy – which benefited from the geopolitical turmoil.
The State Street Global Equity Fund outperformed the MSCI World ex Australia Index during February, providing downside participation of 53%. In addition to the tailwind from our low volatility positioning, exposures to attractively valued stocks provided further boost to the outperformance of the portfolio. From a country and sector perspective, good stock picking within defensive sectors like US Health Care, US Communication Services and US Staples added the most value. At the other end of the spectrum, negative stock selection within US Industrials and US Discretionary were key detractors. The dynamic currency hedging overlay added value in February largely due to a weakening USD (vs. AUD).
During the month, we increase our allocation to select Consumer Staples names as part of regular rebalancing – including a Tyson Foods and a new position in Hershey Co which have been exhibiting relatively strong expected (risk-adjusted) return expectations. At the same time, we have marginally decreased some of our overweight positions in Industrials via Deutsche Post, AP Moller and Johnson Controls International on the back of falling Sentiment scores.
1Source: Bloomberg Finance, L.P., SSGA as at 28 February 2022. Past performance is not a reliable indicator of future performance.
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 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.
All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.
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.
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.
Assets may be considered ""safe havens"" based on investor perception that an asset's value will hold steady or climb even as the value of other investments drops during times of economic stress. Perceived safe-haven assets are not guaranteed to maintain value at any time.
The MSCI World ex Australia Unhedged (AUD) is 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.
This communication is directed at institutional and wholesale clients only. The products and services to which this communication relates are only available to such persons and persons of any other description (including retail clients) are not entitled to rely on this communication.
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.
© 2022 State Street Corporation - All Rights Reserved
Adtrax Code: 4497343.1.1.ANZ.INST
Expiry: 31 March 2023