Fund Update – November 2020

State Street Global Equity Fund

Global markets rallied in November 2020, driven by positive vaccine news and increased certainty regarding the US election result. No sectors fell in November, with Energy and Financials outperforming the most. Value, as an investment style, generated record returns globally. Despite this rally, the valuation gap between Value and Growth has only narrowed marginally and remains extremely stretched by historical standards. 

The State Street Global Equity Fund underperformed the broader index in November. From a sector perspective, Utilities was the only positive contributing sector, and was more than offset by negative stock selection within Staples and Discretionary. Currency hedging gained +2.5% as the AUD rose 3.5c to $0.737 on higher commodity prices and risk-on sentiment. Year to date, underperformance has been concentrated in two cohorts – the very expensive (where we are underweight) and the very cheap (where we are overweight). The strategy aims to minimize total portfolio volatility and as part of achieving that objective we have avoided the most expensive, high sentiment segments of the market that harbor higher valuation risks.