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Active Quantitative Equity (AQE)

Fund Update – February 2023

2 min read

After soaring higher in January, global equities fell during the month of February. Promising economic data coupled with rate hikes announcements made by the US Fed, BOE and the ECB sent mixed signals to investors. Risky assets fell in February as hotter-than-expected economic data prompted investors to reassess their inflation and monetary policy expectations. From a sector perspective, IT, Industrials and Financials led the board, while Real Estate, Materials and Energy lagged the broader market.

Attribution:

The State Street Global Equity Fund underperformed the MSCI World ex Australia Index during February.1 From a country and sector perspective, being underweight US Tech, and negative stock selection within US Healthcare and UK Materials were key detractors from relative performance. On the other hand, good stock picking within Sweden Financials and US Staples were key contributors. Currency hedging detracted -2.6% during the month as the AUD depreciated against the USD.

Notable changes during the month:

During February, 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 Financials (such as Nordea Bank on the back of lower risk measures) and Staples (food manufacturing and retailing on the back of positive Sentiment and Quality). At the same time, we reduced our exposure to select Pharmaceuticals and Health Care Service names (including Quest Diagnostics and Pfizer) – driven largely by falling Sentiment scores.