Active Quantitative Equity (AQE)

Fund Update – January 2023

20 February 2023 2 min read

Equities rallied over January off the back of stabilising recessionary expectations and easing rate hike fears after a soft US Global Domestic Product (GDP) print. In a ‘risk-on’ month, investors are now pricing in significant probabilities of a soft landing in 2023 – supported by the rapid re-opening of China and lower gas prices in Europe. From a sector perspective, higher risk stocks in Discretionary, Communication Services and IT were the top performers. On the other hand, defensive sectors such as Health Care, Utilities and Staples ended the month in the red.

Attribution:

The State Street Global Equity Fund underperformed the MSCI World ex Australia Index during January.¹ From a country and sector perspective, being overweight US Health Care, and negative stock selection within US Discretionary and US Staples were key detractors from relative performance. On the other hand, good stock picking within UK Staples and US Energy were key contributors. Currency hedging added +2.2% during the month as the AUD appreciated against the USD.

Notable changes during the month:

During December, 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 Staples (food manufacturing and retailing on the back of attractive valuations) and Mining (Rio Tinto on balance of risk return opportunities). At the same time, we reduced our exposure to select Health Care names, with Swiss pharmaceutical company Roche being a notable sell. Roche is experiencing falling Sentiment as outlook has been worse than expected.

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Footnotes

Disclosure

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.

For Institutional / Professional Investors use only.

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. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.

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.

References to specific company stocks should not be construed as recommendations or investment advice. The statements and opinions are subject to change at any time, based on market and other conditions.

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.

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.

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Adtrax Code: 5469711.1.1.ANZ.INST
Expiry: 29/02/2024