Fixed Income Monthly Comments - February 2025

Global Bond Total Return

US Employment remained solid in February, while inflation slightly surprised on the upside. Consumption seems to slow with soft retail sales. Initially, rates moved up following the US CPI, but then declined, with a potential end of Fed QT and a change in US banks SLR regulation. Rates in Europe have been rangebound, with a likely increase in military spending following the new US policy regarding NATO. As we reach March deadline, it is still unclear how large tariffs could be and if they will be implemented. Uncertainties prevail on US spending cuts, with limited results by DOGE, and scores of lawsuits against some decisions, while tax cuts might come later in size. These uncertainties played against the ‘Trump trade,’ with the USD and US equities underperforming.

We have maintained the duration around 5 years, as real rates remain attractive. We have kept our credit exposure broadly unchanged and liquid, with HY remaining at 9%. Rates had a positive contribution, while credit spreads contributed positively.

Our steepener strategies performed well as the yield curve continued to normalise with central banks progressively reducing policy rates further. US treasuries benefitted from the potential SLR regulation change and contributed positively. The contribution of our Long/Short strategies, as well as our FX portfolio, was positive.

At the end of the month, the RAM (Lux) Tactical Funds – Global Bond Total Return Fund’s (Class B USD) duration stood at 4.82 years and the average credit quality was AA-.**

For a complete overview of the fund performance, please click on the above-mentioned links in this document.

*The performance is gross of management fees and operational costs (0.60% management fee and 0.40% of operational costs, for a TER of approximately 1%).

** Credit Rating: is a parameter used by banks and lending institutions to determine whether an applicant is deserving of the confidence necessary for the granting of a loan. This parameter makes it possible to measure the risk of consumer default and determine the economic conditions applicable to consumers. The highest rating is indicated by the letters: AAA. This is the indication of highest financial security. This is followed by: AA, A, BBB, BB, etc. The lowest credit rating corresponds to the letter C. This letter identifies a high risk of financial default and is a figure taken into great consideration by each lending institution.

RAM Asia Bond Total Return

Global markets experienced a mixed February, characterised by a flight to safety. US equity stocks declined, and Bitcoin fell below USD 90,000. However, the Hong Kong Hang Seng Index bucked the trend, rising 13.6% on renewed China tech optimism following President Xi’s meeting with industry leaders of the likes of Jack Ma. US Treasury yields fell by 20-33 bps amidst policy risks and tariff uncertainties, leading to a bull steepening of the 2y10y spread by 12bps to 22bps. While the FOMC hinted at a patient approach, Asian central banks, such as Korea, India, Indonesia and Thailand, countered by cutting rates to support growth as inflationary pressures eased. India's RBI lowered risk weighting on bank loans to the non-financial bank companies to encourage lending to consumers. In China, the physical property is showing some signs of recovery. China’s ‘Two Sessions’ this month are expected to set a 5% real GDP growth target, a 2% inflation target and a higher fiscal deficit threshold of 4%.

In Asia credit, the primary market slowed significantly in February, with new issuance dropping to USD 4.9bn from USD 23.3bn in January. Asia credit index posted a positive return of 1.7%, driven by US rates movement. Asia HY credit outperformed IG by 90bps, returning 2.5%. The fund returned 1.5% last month and 2.1% YTD, underperforming the index’s 2.2% return due to long-duration underweight. India was the largest contributor to YTD outperformance. Duration was increased from 4.1 to 4.4 years, with IG exposure raised by 3 bps to 60%.

The RAM (Lux) Tactical Funds II - Asia Bond Total Return Fund’s (Class PI USD net of fees****)  will continue to adjust its duration mix and maintain a selective approach in HY selections to enhance yield and alpha.

For a complete overview of the fund performance, please click on the above-mentioned links in this document.

*** The fund is managed without reference to a specific benchmark. The Index used is not intended to be a restrictive definition of the investment universe. The composition of the fund's portfolio may differ significantly from that of the benchmark index.

**** All fees and expenses, except subscription and redemption fees, are taken into account

Important Information

The RAM (Lux) Tactical Funds – Global Bond Total Return is a Sub-Fund of RAM (Lux) Tactical Funds a Luxembourg SICAV with registered office: 14, Boulevard Royal L-2449 Luxembourg, approved by the CSSF and constituting a UCITS (Directive 2009/65/EC).
The RAM (Lux) Tactical Funds II – Asia Bond Total Return is a Sub-Fund of RAM (Lux) Tactical Funds II, a Luxembourg SICAV with registered office: 14, Boulevard Royal L-2449 Luxembourg, approved by the CSSF and constituting a UCITS (Directive 2009/65/EC). 

Please note that the share classes mentioned in this document may not be registered in your country of domicile. 

This marketing document is only provided for information purposes to professional clients, and it does not constitute an offer, investment advice or a solicitation to subscribe shares in any jurisdiction where such an offer or solicitation would not be authorised, or it would be unlawful. In particular, the Fund is not offered for sale in the United States or its territories and possessions, nor to any US Person (citizens or residents of the United States of America).

This document is confidential and is intended only for the use of the person to whom it was delivered; it may not be reproduced or distributed.

There is no guarantee that the holdings shown will be held in the future. The investment described concerns the acquisition of shares in the Sub-Fund and not in a specific underlying asset.

Past performance is not a guide to current or future results. There is no guarantee to get back the full amount invested. The performance data do not take into account fees and expenses charged on subscription and redemption of shares nor any taxes that may be levied. As a subscription fee calculation example, if an investor invests EUR 1000 in a fund with a subscription fee of 5%, the investor will pay to his financial intermediary EUR 50.00 on the investment amount, resulting with a subscribed amount of EUR 950.00 in fund shares. In addition, potential account keeping costs (by investor’s custodian) may reduce the performance. Some shares in the Sub-Fund apply a performance fee. Leverage intensifies the risk of potential increased losses or returns.

The Management Company may decide to terminate the marketing arrangement in place in any given country in accordance with Article 93a of Directive 2009/65/EC.

Changes in exchange rates may cause the NAV per share in the investor's base currency to fluctuate.

Particular attention is paid to the contents of this document but no guarantee, warranty or representation, express or implied, is given to the accuracy, correctness or completeness thereof.

Prior to any transaction, clients should check whether it is suited to their personal situation, and analyse the specific risks incurred, especially financial, legal and tax risks, and consult professional advisers if necessary.

Please refer to the Key Information Document and prospectus with special attention to the risk warnings before investing. Global Bond Total Return Fund is classified as art.8 SFDR. Asia Bond Total Return Fund is classified as art.6 SFDR. For further information on ESG, please refer to

https://www.ram-ai.com/en/regulatory-information and the relevant Sub-Fund webpage, section "Sustainability-related disclosures".

The prospectus, constitutive documents and financial reports are available in English and French while IIDs are available in the relevant local languages. These documents can be obtained, free of charge, from the SICAVs’ and Management Company’s head office and www.ram-ai.com, its representative and distributor in Switzerland, RAM Active Investments S.A. and the relevant local representatives in the distribution countries.

A summary of Investors’ rights is available on: https://www.ram-ai.com/en/regulatory-information

Issued in Switzerland by RAM Active Investments S.A. which is authorised and regulated in Switzerland by the Swiss Financial Market Supervisory Authority (FINMA). Issued in the European Union and the EEA by the authorised and regulated Management Company, Mediobanca Management Company S.A. 2 Boulevard de la Foire, 1528, Luxembourg, Grand Duchy of Luxembourg.

The source of the above-mentioned information (except if stated otherwise) is RAM Active Investments and the date of reference is the date of this document.