Commentaries

7 November 2019

Emmanuel Hauptmann

RAM Active Investments  RAM (Lux) Systematic Funds - European Equities Maxime Botti Partner & Senior Systematic Equity Fund Manager

The RAM (Lux) Systematic Funds – European Equities Fund returned 1.48%* (Ip-EUR class – net of fees) vs 0.86% for the MSCI Europe TRN. European stocks rose strongly in October, buoyed by the European Union’s decision to grant the UK a three-month Brexit extension, encouraging Chinese manufacturing data, and strong asset inflows into the region. This perceived lull in geopolitical frictions have continued to support risk assets, further detaching European stocks from their fundamentals. While economic activity in the region remains subdued, with German manufacturing PMI in contraction territory and UK productivity falling at its fastest pace in five years, European equities continue their meteoric rise as one of the top-performing asset classes in 2019. From a strategy perspective, our Value and Machine Learning engines were highly alpha generative, with dispersion in the market enabling our engines to seize stocks exhibiting profitability and cash flow generative qualities. In stark contrast to September, we saw our Momentum engine contribute positively, while naturally during these upmarket moves our Defensive engine lagged. Both Netherlands (Energy) and Belgium (Consumer Staples) names contributed positively to our performance, but the primary driver of our outperformance was the UK. Here, Consumer Staples and Discretionary picks, as well as a helpful allocation effect drove returns. Conversely, our underweight to German Consumer Discretionary and IT names detracted, with both sectors enjoying a strong month. From a sector perspective, our Defensives were responsible for positive performance, with both Consumer Staples and Energy names contributing nicely. Elsewhere, our underweighting of Health Care names, primarily in Germany, acted as a headwind.  

*Sources : RAM Active Investments