6 December 2019

Emmanuel Hauptmann

The RAM (Lux) Systematic Funds - Global Sustainable Income Equities Fund ended November up 2.07%* (Ip USD class - net of fees), outperforming the MSCI World High DY TRN index which returned 1.48%. Markets remained at the mercy of the sentiment surrounding the latest Sino-U.S. trade deal, with investors remaining hungry for evidence of progress on the finalisation of a so-called “phase one trade deal”. The current narrative suggests that everything is rosy in global equity markets, with the Federal Reserve’s decision to cut interest rates three times helping to avert a nascent recession. Bizarrely, market sentiment appears to be improving even as the underlying economic data appears to be worsening. Economic data over the month indicates that both the U.S. and Chinese economies have begun to experience negative effects related to the two-year-old trade war, with economic growth in China slowing to a 30-year low and Growth in the U.S. having also slowed. Meanwhile in Europe, markets touched highs last seen in 2015 while the economic situation paints an immeasurably different picture. Market sentiment appears to be improving even as the underlying economic data appears to be deteriorating, as Germany’s export-dependent manufacturing sector continued to contract, and Britain’s economy grew by 0.3% in the last quarter, after shrinking in Q2, and annual growth slowed to just 1%. Regionally, our North American model was largely responsible for our significant outperformance, while Asia lagged and Europe marginally outperformed. Cyclical names across Communication Services, IT and Consumer Discretionary helped to drive portfolio outperformance, with the evidenced rotation out of Defensives and into Cyclicals helpful for our income theme. Elsewhere, Singapore (Energy & Financials) and the UK (Health Care & Communication Services) were also highly alpha generative.

*Sources : RAM Active Investments.