Commentaries

8 February 2021

Emmanuel Hauptmann

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

The RAM (Lux) Systematic Funds - Long/Short Global Equities Fund (Class-PI USD net of fee*) posted a performance of 2.31% in January.

Despite the drop in the levels of short interest initiated globally on November 9th following the rotation in favour of lockdown-hit industries on the back of vaccine optimism, we saw another round of short covering in January, this time triggered by the activity of retail investors, as Gamestop and other high Short Interest names in the US market were targeted by some investors’ groups. This environment has increased risk for market participants active in short-selling, and led to a large reduction of exposure by Long/Short Equity funds in the industry, and a reallocation from crowded short trades to index hedging, creating some downside pressure on equity indices at the end of the month. While our Long book contributed positively to the performance in January, thanks to most alpha engines having some good momentum picks in the Healthcare sector and wise selection in cyclical value names, our short book proved resilient during this short covering. Thanks first to the large diversification of the Short book (hundreds of names) versus more concentrated discretionary approaches, and secondly thanks to our bias towards names with reasonable levels of Short Interest and costs of borrow, avoiding therefore main targeted companies by those retail investors.

Source: RAM Active Investments.