Commentaries

7 November 2019

Emmanuel Hauptmann

RAM (LUX) SYSTEMATIC FUNDS – LONG/SHORT GLOBAL EQUITIES

The RAM (Lux) Systematic Funds - Long/Short Global Equities Fund returned +0.38%* (PI USD class – net of fees) in October. A perceived de-escalation in U.S.-China tensions and Brexit optimism continued to drive up risk assets, yet a slew of weakening macroeconomic indicators acted as an undercurrent throughout October. Despite signs that weakness caused by a protectionist push is spreading beyond manufacturing and casting a shadow on the global growth backdrop, markets preferred instead to focus on central banks’ supportive actions where global central banks have delivered an unusual late-cycle dovish pivot in 2019, helping to extend an already-long economic expansion. The Fed’s rate cut at the end of the period was the latest instalment of this dovish push. Broadly, it was our long book which drove positive performance. Here, we witnessed our GARP/Momentum and Defensive engines provide substantial alpha, while Value was broadly flat. Within our long book U.S. picks where highly alpha generative, with higher beta names within IT and Health Care proving helpful. We also saw Hong Kong names outperform, especially within our Value engine, while Japan longs outstripped their shorts. Our Fund suffered within our short engines, closely echoing September’s woes, albeit to a lesser extent. A strong rally owing to a partial trade agreement between the U.S. and China pushed investors to indiscriminately buy stocks, where Low quality companies were bought back by the market at the expense of those with stronger fundamentals. The outcome of this was a mid-month spread widening between the long and short side of Momentum, largely driven by a painful sector rotation where both sides of the book where hit; Consumer Staples, IT and Real Estate all fell, while Energy, Financials and Materials all rose. Conversely, our Short Value engine was highly alpha generative.  

*Sources : RAM Active Investments