Fund Update - March 2021

State Street Multi-Asset Builder Fund


Global equity markets posted strong returns in March 2021 as markets became more comfortable with previous concerns surrounding rising inflation expectations and bond yields. SSGA’s Market Regime Indicator (MRI) was largely consistent with these moves over the month and finished
March 2021 in Low Risk Regime. The signal started in Low Risk Regime and moved slightly higher in the first couple of days. It peaked in early March and
reversed course, trending downwards and settling in Low Risk Regime until the end of the month. On the economic front, the economic recovery continued in March on the back of widespread vaccination, renewed fiscal stimulus and continued monetary policy support. Manufacturing continued to expand strongly across regions, but services growth improved only in the United States (US) and the United Kingdom (UK) and lagged in rest of Europe. The emergence of new variants of Coronavirus and a pick-up in inflation caused by cost pressures across supply chains remained key risks to growth momentum.

Looking forward, we continue to expect a strong global economic recovery as the vaccine implementation becomes more wide spread, thus our outlook does remain optimistic. Within growth assets, local equity markets (S&P/ASX 200 Net Total Return Index) saw positive returns, and was up 2.4% for the month. Global equity markets were positive with the US (MSCI US Net Total Return Local Index) up 3.7%, Japan (MSCI Japan Net total return local) up 4.8% with Europe (MSCI Europe Net Total Return Local Index) posting a strong 6.1% return. Emerging markets (MSCI EM Index Net Total Return Local Index) bucked the trend posting negative returns, down -1.5% over the month. 

In the fixed income space, Australian Government Bond yields fell with longer duration yields falling over the month whilst shorter duration bond yields were flat as the Reserve Bank of Australia (RBA) continued with their yield curve control targeting the three year yield. Our exposures to credit with a shorter duration profile posted positive returns for the month with yields on credit falling. Across our alternatives exposures, our investments in commodities added to performance but our emerging markets bonds exposure posted negative returns with both positively affected by a weaker Australian dollar.

Looking into our average positioning across the portfolio for the month of March, the Growth assets allocations have been approximately 70% for the State Street Multi-Asset Builder Fund. Our exposure preferences in March were an overweight exposure to equities but we maintained a diversified exposure to fixed income, alternatives and cash across the remainder of the portfolio. Performance wise, our diversified exposures across equities, fixed income and alternatives resulted in the portfolio delivering a strongly positive return in March.