Over the 12 months to 31 January, 2020, according to FE Analytics, the fund returned 16.3% versus returns of 28.3% by its MSCI World ex Australia benchmark.
It held 7.5% allocated to IT, less than half of the 18.4% held by its MSCI benchmark, and there were no IT companies in the fund’s top 10 positions.
In a January fund update, Olivia Engel, chief investment officer for active quantitative equity, said: “Having a lower exposure to Energy and Materials added value, but was more than offset by our lower than benchmark weight in IT (not holding Microsoft and Apple) and negative stock selection within Discretionary (not holding Amazon).”
Shares in Microsoft returned 51% over the past year while Apple returned 67% over the same period.
She added: “The fund underperformed over the past 12 months; having a lower exposure to IT was the single biggest detractor, taking away 3.3% from benchmark relative performance (again, not holding Apple and Microsoft). On the other hand, having a lower than benchmark exposure to Energy and good stock picking within Materials contributed positively.”
However, Engels said she felt technology as a sector was ‘much more expensive’ for the fund to consider increasing its weighting at the current time as she saw better opportunities in other sectors.
“Both the Software and IT Services segments are much more expensive than other segments of the market. Investors have been rewarding these companies, and earnings forecasts are being revised upward, so sentiment is very positive.
“We find better quality characteristics in some of the more mature companies in the IT Services segment and have found select names there to invest.”
Performance of State Street Global Equity fund versus MSCI World ex Australia benchmark over one year to 31 January, 2020
