Commentaries

L/S GLOBAL EQUITIES FUND MANAGERS' COMMENTS JUNE 2020

14 July 2020

Emmanuel Hauptmann

RAM (LUX) SYSTEMATIC FUNDS – LONG/SHORT GLOBAL EQUITIES

The RAM (Lux) Systematic Funds - Long/Short Global Equities Fund returned +3.60%* (PI USD class – net of fees) in June.

The first week of June saw a continuation of the risk-on and short covering that characterized the month of May, hurting us across Short single name books in the funds. During the rest of the month Equity markets traded sideways and we could finally see some return dispersion in favour of our engines, mitigating some of the large beginning of the month drawdown. Particularly in US, investors seemed to show little concern on the earnings seasons coming up, and on the rise in Covid-19 cases. Neither polls suggesting an intense battle in the economic front between the candidate in the US elections had impact on growth prospects in investor minds. At a strategy level, we observed a strong contribution from our Value and Machine Learning engines, finally recovering in the second half of the month thanks to improve considerations of companies having Quality-biased Value in the US market. We were also able to select positive picks within the Healtcare sectors on the long side. On our short book, we saw positive contributions across all our strategies as the short covering of May/beginning of June was followed by what appears to be the start of a reversal in the US. 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. After the recent record short covering in the market, we also see a large number of Low-Quality, highly leveraged and negative free-cash-flow companies trade at very generous levels of valuation despite the current challenging environment, which provides a lot of attractive opportunities for our Short single name engines.

*Sources : RAM Active Investments