Fund Update - September 2020

State Street Multi-Asset Builder Fund

Global Growth momentum also decelerated toward the end of equity markets were negative in September 2020, pausing their strong recovery since markets bottomed in March. Caution returned to markets as COVID-19 infection rates re-surged in some developed economies, although key vaccine trials continued to make quick progress.  the third quarter as global fiscal support waned and services growth remained restricted, given persistent and rising COVID-19 cases. Weakening fiscal support, geo-political concerns related to the US election, and worsening US-China relations remain key risks to recovery providing headwinds to further gains in growth assets. Our outlook does however remain cautiously optimistic.

Within growth assets, local equity markets (S&P/ASX 200 Index – Net Total Return) saw negative returns and were down -3.7% for the month. Global
equity markets were also negative with the US (MSCI US Index – Net Total
Return) and was down -3.8%, whilst Europe (MSCI Europe Index – Net Total
Return) was down -0.9% but Japan (MSCI Japan Index – Net Total Return) managed a small 0.5% gain. Emerging markets (MSCI Emerging Markets Index – Net Total Return) posted negative returns and was down -1.6%, outperforming developed markets. In the fixed income space, Australian government bond yields moved lower as markets expected further action from the Reserve Bank of Australia (RBA) with the 10 year government bond yield lower by 20bps, helping to drive a positive return for corporate bonds locally. Across our alternatives exposures, our investments in both commodities detracted from performance but a weak Australian dollar resulted in positive returns for our emerging markets bonds exposure.

Looking into our average positioning across the portfolio for the month of September, the Growth assets allocations have been approximately 36% for the State Street Multi-Asset Builder Fund. Our exposure preferences in September were to have a diversified exposure to equities, fixed income, alternatives and cash as we seek to balance the strong momentum in equities versus the uncertainty in the economic outlook with the upcoming US election and US/China tensions. Performance wise, our diversified exposures across equities, fixed income and alternatives resulted in the portfolio delivering a marginally negative return in September.