9 January 2019

Thomas de Saint-Seine


The RAM (Lux) Systematic Funds - Global Sustainable Income Equities Fund returned -8.89%* (Ip USD class - net of fees), underperforming the MSCI World High DY TRN index which returned -6.68% over the month. Global stocks concluded a dreadful year with a whimper in December, as markets continued to be battered by the trade conflict between the U.S. and China, fears over rising interest rates and geopolitical issues such as Brexit. Our models were again undermined by the diversification they look to offer investors, in this instance we suffered from our U.S. small cap exposure as well as our income picks within the Financials and Consumer Discretionary sectors which subsequently underperformed. Overall, small and mid-caps drastically underperforming their large cap counterparty in December, hurting. Broadly our allocation effect proved to be a relative positive for us, while it was evidently our weak stock selection effect which detracted markedly. Within our U.S. model both Financials and Consumer Discretionary picks weighed, as did Health Care names. The only succor within the U.S., was our stock selection within Energy names. Our European model faired a little better; with positive stock selection within Italian Utilities. However, our Asian model struggled, with a large relative overweight allocation in Australia detracting, as did our small cap picks here (we again witnessed the continued underperformance of smid caps vs large cap peers). From a broad sector perspective stock picking across Financials, Consumer Discretionary and Communication services names all detracted.

*Sources : RAM Active Investments.