Commentaries

14 February 2020

Thomas de Saint-Seine

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 fell -1.36%* (Ip-EUR class – net of fees) while the MSCI Europe TRN fell by -1.26%. The spread of a deadly virus from China dominated newsflow and sentiment over the month. However, European markets were fairly well insulated relative to their emerging and global counterparts, and instead focused on the political developments across Italy and the UK. In economic news, the BoE kicked off 2020 by announcing no change to policy with the bank rate stayed at 0.75 percent and QE also remaining capped. The decision to maintain rates was met with disappointment by investors, who have seemingly grown accustomed to having their risks mitigated by central banks. From a macroeconomic perspective, the UK witnessed its worst growth since 2012 (just 0.6%). Meanwhile, German manufacturing data suggested demand is firming up, shaking off the trade drag that nearly pulled the economy into recession last year. Italy’s coalition government was in turmoil after Luigi di Maio stepped down from his post as head of the Five Star Movement. The prospect of a Salvini comeback hung over markets for much of the month, with Italian financials taking a battering as a result. From an engine perspective, our Low Vol/Defensive style was the month’s relative outperformer, offering portfolio protection, while our GARP/Momentum style was also highly alpha generative. Conversely, both our Value and Machine Learning engines stuttered in a difficult month for value stock pickers. At a sector level, losses were contained within Industrials and Consumer Staples picks, the latter largely owing to a significant relative underweight. On the positive side, cyclical selection across Financials and Consumer Discretionary names notched positive gains, while our Materials picks brought an additional source of alpha. Country-wise, losses felt from our relative overweight to Denmark (Health Care) and underweight to Switzerland (Consumer Staples), eroded gains made within our models across the UK (Consumer Discretionary) and Netherlands (Energy). 

*Sources : RAM Active Investments