Global equities rose +4.0% in AUD terms in July 2021, outperforming emerging markets which returned negatively. The recent surge in Covid-19 infections in countries with high vaccination rates has come as something of a surprise. But despite the rise of US Covid-19 cases, the Fed unanimously held policy – with inflation language unchanged, as it maintained its stance that inflation figures have been reflective of purely transitory factors. From a sector standpoint, Real Estate, Health Care and IT outperformed, while Energy and Financials lagged.
The State Street Global Equity Fund underperformed the broader index (MSCI World ex Australia TR Index) in July. The underperformance was largely driven by currency hedging, which detracted 1.2% due to a weakening AUD (depreciated 1.6c against the USD). From an unhedged perspective, the portfolio outperformed the market index, driven by good stock selection within Health Care and Discretionary. On the negative side, negative stock selection within IT was a key detractor.
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