14 July 2020

Emmanuel Hauptmann

RAM Active Investments RAM (Lux) Systematic Funds -Emerging Markets Equities

The RAM (Lux) Systematic Funds – Emerging Markets Equities Fund finished the month up 5.65%* (Ip USD Class – net of fees), while the MSCI Emerging Markets TRN$ returned 7.35%.
While year-to-date our fund continues to perform in line with the index, June has been a technical month for our strategy. The first week of June saw a continuation of the risk-on and short covering that characterized the month of May, during the rest of the month Equity markets traded sideways. We saw then some return dispersion in favour of our engines, mitigating some of the large beginning of the month drawdown. The uncertainty we see in companies’ fundamentals and earnings revisions is likely to translate into more volatility in the next weeks and months, and the defensive positioning of our Momentum engines should be a positive driver of relative performance when that occurs.

On a country basis, our underweight in China has been detrimental to our performance despite the positive contribution of our China A-Share allocation. Furthermore, our prudent underweight in Brazil was not able to offset the loss yet. We believe that risk in EM remains virus-related, but tensions within US-China relations may resurface as well, given the political agenda of the 2 countries have on the shorter term. In this environment, we were keen to see our model reduce its allocation to countries like Brazil and Russia, while maintaining our underweight in China.

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Source: RAM Active Investments