Commentaries

7 November 2019

Emmanuel Hauptmann

RAM Active Investments  RAM (Lux) Systematic Funds - North American Equities Maxime Botti Partner & Senior Systematic Equity Fund Manage

The RAM (Lux) Systematic Funds - North American Equities Fund ended the period up 1.62%* (PI USD class - net of fees), underperforming the MSCI North America TRN$ by 40bps. U.S. equities again posted positive gains in October, as a perceived de-escalation of the U.S. and China trade war, strong monthly jobs and a positive Q3 earnings meant that several key U.S. stock markets reached new highs. Amid this seemingly euphoric period of U.S. equities, it’s worth noting that key macroeconomic data and the U.S.-led protectionist push continue to inject uncertainty into markets, while quietly threatening to weaken wider economic activity. Third-quarter GDP growth came in at a better-then-expected 1.9% (annualised), below last quarter, while further evidence of a persistent slowdown in manufacturing and business investment came in the form of ISM’s manufacturing activity maintaining a one-decade low, while the CPM’s index hit a four-year low. The Fed again cut interest rates by a quarter-point and signalled that policy is just about where officials want it to be. Broadly, large cap names, especially in the IT, Health Care and Communication Services sector enjoyed an incredibly strong month, benefiting from the risk-on sentiment. From a country perspective, Canadian names brought additional performance source, while our U.S. allocation detracted. The consumer sectors (Discretionary and Staples) both detracted from performance, the former primarily in Automobile Manufacturers, while the latter within Household Products. Our positive selection within Financials, was completely eroded by our underweight here, especially within the Bank and Property segment. Elsewhere, we saw positive in Energy names, where our helpful underweight owing as oil prices fell on oversupply concerns, paid dividends. Our strongest alpha source was Health Care with Pharmaceuticals and Health Care Services delivered following some strong quarterly earnings announcements.  

*Sources: RAM Active Investments