7 November 2019

Emmanuel Hauptmann

RAM Active Investments RAM (Lux) Systematic Funds -Emerging Markets Equities

The RAM (Lux) Systematic Funds – Emerging Markets Equities Fund finished up 3.98* (Ip USD Class – net of fees), performing in line with the MSCI Emerging Markets TRN$’s return of 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 instead focused on central banks’ supportive actions. Emerging markets 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. 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. From a strategy perspective, our Value and GARP/Momentum engines performed the best, naturally Defensive weighed, as did our Machine Learning engine. We saw positive performance stemming from positions within our Momentum engine in China (Communication Services) and South Africa (Consumer Discretionary) names, with the latter also a helpful relative underweight. Our selectivity, especially within high-beta cyclical sectors such as Communication Services and IT, has been a strong positive for the Fund this year. On the negative side, South Korea names continue to hamper our engines, with our Industrials relative overweight weighing heavily as the chip sector downturn and global trade disputes continuing to weigh here. On a sector basis, Communication Services reversed last month’s losses, while Consumer Discretionary names further boosted returns. Conversely, we saw losses emanating from our relative overweight to Industrials and Real Estate selection. 

*Sources : RAM Active Investments