Commentaries

11 June 2020

Emmanuel Hauptmann

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 returned 4.24%* (Ip-EUR class – net of fees) while the MSCI Europe TRN finished up 2.95%. Stocks ended the final week of the month higher, with May marking the start of the gradual reopening of both the domestic and global economy. A steady but slow decline in new infections has allowed the partial lifting of restrictions, subsequently boosting investor confidence. We saw more cyclical sectors, such as financials and industrials, broadly outperform, while European equities reacted extremely positively to a proposed €750 billion recovery fund by the European Commission. The proposal requires approval by all EU members and includes €500 billion of grants to member countries. Elsewhere, dovish comments from Bank of England policy-makers contributed to better risk appetite at the end of the period. Our relative outperformance continued into May, despite a major rotation in the market which significantly impacted both our Momentum and Defensive/Low Risk engines. Here, we witnessed banks, car manufacturers, travel agents, leisure and those industries most negatively impacted by the Virus bounce back aggressively, despite extremely negative earnings dynamics for all these companies. Our engines which have almost zero exposure to any of these names, suffered from a strong sell-off in the highest momentum names of the last few months, so were significantly down in an overall up-market. Despite this, we generated significant outperformance elsewhere, with our Value and Machine Learning engines generating significant alpha. On a sector basis picks across Consumer Discretionary and Financials names helped to drive gains, while we also profited from a helpful selection effect across UK and Swiss Healthcare names. On a country basis, Sweden continues to be our top positive contributor, both in May and year-to-date, while we also saw positive contributions from the UK and Switzerland. 

*Sources : RAM Active Investments