Commentaries

15 May 2020

Thomas de Saint-Seine

RAM Active Investments  RAM (Lux) Systematic Funds - North American Equities Maxime Botti Partner & Senior Systematic Equity Fund Manage

The RAM (Lux) Systematic Funds - North American Equities Fund ended the period up 11.76%* (PI USD class - net of fees), while its benchmark the MSCI North America TRN$’s, returned 13.08%. The Federal Reserve’s support and rising hopes for economic reopening sparked April’s rally while leading indicators simply served to highlight the desolation within the real economy. Economic data continues to point to a downturn which will likely be deeper than the recession that followed the 2008 GFC, but consensus continues to lag the reality on the ground. Consumer spending dropped to the worst ever on record (3.5x worse than the previous record set in January 1987) as the virus continues to expose the fragility of an economy built on central bank support. April proved to be a month of negatives, but ended in strong positive performance, negative; rates, yields, growth and oil prices. This month’s rally was evidently driven, not by fundamentals, but by the liquidity support from the Fed, and investor sentiment improved throughout the month. The Federal Reserve took unprecedented action to save the economy during the month with a series of rate cuts and a slew of credit and lending programs that could inject more than $6 trillion into the economy, while Congress also passed $2 trillion in rescue efforts. Broadly, our U.S. picks weighed while our Canadian selection contributed. Within the U.S a handful of Consumer Staples and Health Care names outpaced our models, with the former sector enjoyed a particularly profitable month, and remains one of our Fund’s top performing sectors in 2020, while our significant relative overweight to the former detracted markedly. Elsewhere picks across Industrials and Financials names helped to deliver alpha and assuage the losses felt elsewhere.

*Sources: RAM Active Investments