Fixed Income Monthly Comments - November 2024

Global Bond Total Return

Rates corrected recent selloff with Scott Bessent nomination as Treasury secretary reassuring investors that realism may prevail above dogmatism, and Trump aggressiveness is a negotiation tactic, which has still to be confirmed once. Data in Europe remained weak, pointing towards lower policy rate and a softer currency. As rate cuts expectations were reduced, we increased slightly our duration in EUR  and US, while we reduced it on Swiss markets where yields have continued to decline.

We use the solid demand and liquidity for corporate bonds to book profit on a significant part of our Senior financials exposure. We replaced them with a combination of US Treasuries, which are already pricing the massive supply needs and are trading at 0.50% over Swaps, which is extremely cheap, and IG CDS to replicate an IG exposure, as both instruments are very liquid. Over the medium term, it replicates well the performance of IG exposure.

Overall, our duration has slightly increased and our HY exposure remain at 8%. Both rates and credit contributed positively to performance. Disinflation and rate cuts in Europe remain a theme we play with steepeners between 10y and 30y maturities, which had a positive contribution, as well as US asset swaps. Our currency positions have been unchanged this month, and delivered a flat contribution overall.

At the end of the month, RAM (Lux) Tactical Funds – Global Bond Total Return Fund’s (Class B USD) duration stood at 4.16 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

Outlook and Portfolio Performance

The Asia credit market had a positive month. The JP Morgan Asia Credit Index (JACI) returning +0.46%, driven by favorable U.S. rates movement after initial concerns of Trump trades receded somewhat. Investment-grade bonds outperformed with a +0.56% return, while high-yield bonds posted a negative return. U.S. Treasury yield curve bull flattened, with the 10-year yield declining by 12 basis points to 4.17%. In China, the National People's Party Standing Committee meeting produced no surprises, with the government announcing a CNY10 billion local government debt swap but no consumption stimulus. China's stock market managed to end the month 1.3% higher, and the JACI China sub-index returned +0.42%. The upcoming Central Economic Work Conference in mid-December is expected to announce further stimulus measures, likely targeting domestic spending, relaxing the budget deficit target to 3.8%, and efforts to stabilize the property sector. The Asia primary market accelerated last month. Issuers likely front-loaded their funding plans ahead of 2025. Last month, RAM (Lux) Tactical Funds II - Asia Bond Total Return Fund’s (Class PI USD net of fees****) returned +0.06%, and the year-to-date return to +5.05%. The underperformance was mainly due to our overweight exposure to India, with the JACI India sub-index returning -0.09% following the US DOJ indictment of Adani Group's chairman Gautam Adani and two other directors. Our exposure to Adani is manageable, limited to secured and highly regulated transmission and positive free cash flow port businesses with sound funding and liquidity. There were no material changes to the portfolio's duration last month. Despite this, risk appetite for Asia credit remains resilient, including for India credits.

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.