Commentaries

14 February 2020

Emmanuel Hauptmann

RAM Active Investments RAM (Lux) Systematic Funds - Long/Short Emerging Markets Equities funds Maxime Botti Partner & Senior Systematic Equity Fund Manager

The RAM (Lux) Systematic Funds - Long/Short Emerging Market Equities Fund returned -1.16%* (I USD class – net of fees) in January. The rapid spread of deadly virus from China remained at the forefront of emerging markets investors’ minds and exposed the fragility of global markets in January. Concerns that the impact could develop into a global pandemic forced markets into a clear risk-off mode, but with China’s markets closed for New Years holidays, the contagion into wider Asia was perceptible (with Hong Kong and Taiwan taking the brunt of the panic selling), subsequently company fundamentals were again forced to take a backseat. Amid such indiscriminate selling, stock selection became incredibly difficult as mega-cap names in the index benefitted from these moves. With the wider market falling over 5%, alpha on the long side was difficult to generate, with our Defensive engine the month’s clear relative outperformer, while Value was also largely positive. Conversely, our long GARP/Momentum style weighed heavily. Our short engines painted an extremely different picture, with all engines alpha generative. Our Short Momentum and Quality led the way, while Value also producing positive returns. Our shorts in China’s materials and technology names helped to offset some of the losses experienced by our longs, while we saw a similar situation across Taiwan and South Korea. Conversely, on the positive side, our Russia longs (Energy) and shorts (Industrials) helped. Sector-wise, all our sector shorts were positive, but again, these gains were eroded by our longs, especially within Industrials and Financials. 

*Sources : RAM Active Investments