Commentaries

14 December 2018

Thomas de Saint-Seine

RAM Active Investments RAM (Lux) Systematic Funds - Emerging Markets Core Equities Maxime Botti Partner & Senior Systematic Equity Fund Manage

 

The RAM (Lux) Systematic Funds – Emerging Markets Core Equities Fund was up 1.47%* (Ip USD Class – net of fees) in November, underperforming the MSCI Emerging Markets TRN which was up 4.12%. Following on from last month’s trend, small and mid-caps outperformed their large counterparts, proving extremely unhelpful for our approach to investing in the region. Allied to this, it also provided to be an extremely difficult month for systematic stock pickers with most “styles” out-of-favour again in November as weakened sentiment and a market correction continued to take a toll on performance, especially early in the month. Most of our Fund’s underperformance was owing to a strong negative allocation effect, with our selection effect still weighed, albeit to a lesser extent. China and Hong Kong proved to be the biggest detractor at the country level, followed by Australia and India. We witnessed Chinese tech and Indian Financials names bounce strongly following October’s lows, with our naturally diversified approach unable to capture these relative new market trends. On the positive side, we witnessed a strong positive stock selection effect in South Korea, with Industrials and IT pics combining nicely. Sector-wise both Materials and Communication Services pics detracted the most, while our selection within IT and Industrials were both positive. Despite the increase in volatility and subsequent underperformance, we remain confident in ability to outperform our benchmark over the long-term given our current positioning.

Changes at the country level were muted, with Russian and Taiwan trimmed at the expense of Poland and South Korea. In terms of sector allocation changes, both IT and Materials were trimmed, while Industrials and Communication Services were increased.

*Sources : RAM Active Investments