Commentaries

7 November 2019

Emmanuel Hauptmann

RAM Active Investments RAM (Lux) Systematic Funds - Emerging Markets Core Equities Maxime Botti Partner & Senior Systematic Equity Fund Manage

The RAM (Lux) Systematic Funds – Emerging Markets Core Equities Fund finished up 4.02%* (Ip USD Class – net of fees) in October, performing in line with the MSCI Emerging Markets TRN which returned 4.22%. 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 focused on central banks’ supportive actions. EM heavyweights China and India both offered a glimpse at the health of their economy, with the former’s manufacturing activity shrinking for the sixth straight month. At the end of the period, the Fed again cut interest rates by a quarter-point and signalled that policy is just about where officials want it to be. The key question for investors is whether the weakening of economic data can justify the better performance of emerging market equities. Large cap names continued their dominance over their small and mid-cap counterparts, in-line with a trend that has been in play for some time here. From a country perspective we generated positive performance in South Africa and China names. Within the former, our avoidance of certain Consumer Discretionary and significant overweighting of Materials names was a strong source of positive performance. Our stock selection effect in China was also positive, with our underweighting to the highly overvalued Communication Services sector proving a prudent move. Conversely, we suffered from our South Korea exposure, where our relative underweight and weak stock selection detracted. Sector wise, we saw positive contributions emanating from our picks across Materials and Communication Services names, while Consumer Discretionary picks in Australia and Brazil added. Conversely, Consumer Staples names acted as a headwind over the month. 

*Sources : RAM Active Investments