14 February 2020

Thomas de Saint-Seine

The RAM (Lux) Systematic Funds - Global Sustainable Income Equities Fund finished January down -3.96%* (Ip USD class - net of fees), with the MSCI World High DY TRN index falling -2.76%. The coronavirus outbreak emanating from China sent jitters across financial markets amid fears of a hit to the global economy in January. Emerging markets suffered to a greater extent than their developed counterparts, as with China’s domestic market closed for New Years, the contagion into wider Asia was palpable. Away from the virus, both the Federal Reserve and the BoE kept interest rates unchanged. For now. The Fed signalled it will remain on hold for the foreseeable future as the U.S. election approaches, while the BoE’s decision to maintain rates was met with disappointment by investors, who have seemingly grown accustomed to having their risks partly mitigated by central banks. From a regional perspective, losses were felt across our North American and Asian models, while our European model was alpha generative. Broadly, underperformance was almost entirely owing to our allocation effect; as amid such indiscriminate selling, mega-cap names in the index benefitted from these moves. Country-wise, key detractors for the month were found in the U.S. (Consumer Staples & Utilities), China (Financials & Real Estate) and Switzerland (Health Care). Conversely, stock selection across Germany (Consumer Discretionary) and French (Energy) picks helped to stem portfolio losses. On a sector basis, we suffered losses from our allocations to Utilities and Consumer Staples, which both represent our most significant relative underweights. Elsewhere, our Financials picks also detracted markedly.

*Sources : RAM Active Investments.