Active Quantitative Equity (AQE)

Fund Update – September 2023

13 October 2023 2 min read

Global developed market equities fell in September, as US yields rose by 49bps to 4.57%, and expectations of the Fed's hawkish tone continued. Global economic growth remained lackluster in the third quarter, with manufacturing activities contracting for the fourth month running and services sector growth also slowing down. Business activity in the United States (US) rose at a weaker pace, signaling broad stagnation in output amid muted demand conditions. Activities in the eurozone rebounded by a bit in September, but still remained in contractionary territory. Core inflation numbers showed a disinflationary trend, while the labor market continued to be relatively robust across key developed economies.

Attribution:

The State Street Global Equity Fund outperformed the MSCI World ex Australia Index during September¹. Our Alpha model performance was strong in September, with positive contribution from Value factors followed by Sentiment and Quality factors, while Catalyst factor was slightly down. From a country and sector perspective, good stock picking within US Technology and US Health Care sector were key contributors towards relative performance. On the other hand, poor stock selection within Japanese Financials and UK Consumer Staples sectors were the key detractors. Currency hedging detracted -0.05% during the month.

Notable changes during the month:

During September, 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 the Technology Hardware Storage & Peripherals (notably Dell Technologies on the back of increasing Catalyst score) and Diversified Metals & Mining company Glencore on the back of improving Sentiment scores. At the same time, we reduced our exposure to select Food Retail companies – such as J Sainsbury (falling Sentiment and Catalyst scores) and Koninklijke (on the back of falling Sentiment score).

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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 Statement 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 "Value" style of investing that emphasizes undervalued companies with characteristics for improved valuations, which may never improve and may actually have lower returns than other styles of investing or the overall stock market.

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Adtrax Code: 6010173.1.1.ANZ.INST
Expiry Date: 31/10/2024