Commentaries

13 January 2020

Thomas de Saint-Seine

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 5.48%* (Ip USD Class – net of fees) in December, underperforming the MSCI Emerging Markets TRN return of 7.46%. December proved to be a microcosm of 2019; with the market’s optimism continuing to evolve around ongoing stimulative central bank fiscal policies, the de-escalation of trade tensions between the U.S. and China, and a resilient U.S. economy. December also witnessed the unparalleled outperformance of large cap vs small cap stocks, while higher beta names outstripped their defensive counterparts. Emerging markets were the best-performing asset class in December, but still lagging their developed market peers for the year. From a strategy perspective, our Value and GARP/Momentum engines were the strongest relative contributors for the month, while Machine Learning was broadly flat, and our Defensive style weighed heavily in this risk-on backdrop. The asset class ended a turbulent year in which global trade tensions dominated headlines and market sentiment, and global central banks came to the rescue of the world economy from falling into a recession. With markets aided by this accommodative stance by central banks more volatile stocks outperformed across almost every region. China, South Korea and Taiwan led losses from our Fund, with Asian stocks largely benefitting from both the phase 1 deal and a marginal improvement in the macroeconomic data in the region. Our models were largely unable to keep pace with the positive momentum witnessed in this region, and it was this that was the primary cause of our relative underperformance. On the sector-front, losses were contained in those higher-beta sectors across IT and Communication Services, while we did generate gains in Utilities and Materials picks.  

*Sources : RAM Active Investments