Commentaries

14 January 2020

Thomas de Saint-Seine

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

The RAM (Lux) Systematic Funds – Emerging Markets Equities Fund finished up 6.27%* (Ip USD Class – net of fees), 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 global 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 lagged their developed market peers for the year. From a strategy perspective, our Value and 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 more volatile stocks outperformed across almost every region. From a country perspective, losses were generated by high-beta Technology names across China and Taiwan. The former benefitted from data showing manufacturing activity expanded for a second straight month. While the latter saw some spillover benefits from the positives of the trade war as its companies start onshoring some operations. On the positive side, our underweighting of India helped to offset some of these losses, while stock selection within Indonesia helped. On the sector-front, losses were contained in those higher-beta sectors across IT, Communication Services and certain Financials. Conversely, our Energy and Materials selections were broadly positive. Moving into 2020, our defensive positioning with a fundamentals focus, will hopefully enable us to mitigate what could be a volatile period for emerging markets.  

*Sources : RAM Active Investments