Commentaries

9 January 2019

Thomas de Saint-Seine

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

 

The RAM (Lux) Systematic Funds – Emerging Markets Equities Fund outperformed its benchmark, returning -2.52%* (Ip USD Class – net of fees), vs the MSCI Emerging Markets TRN$ which returned -2.66%. Emerging market equities remained suppressed in December, mirroring the concerns throughout 2018 over the protracted trade wars between the U.S. and China. In addition, lower oil prices, higher U.S. interest rates and slowing growth in China also troubled emerging markets over the month. Our Fund’s diversified approach enabled us to outperform the market, with all engines producing a positive contribution. Our Machine Learning and Defensive engines (the former, the month’s significant outperformer) performed the best, while Momentum and Value lagged slightly. Broadly it was our positive stock selection effect in a deteriorating market which was the primary contributor to returns, while our allocation effect also helped. Our Fund’s continued significant underweight to China (with the country indicating a deceleration of its domestic economy), as well as prodigious stock selection here, drove outperformance. We also witnessed contributions emanating from our Poland and Singapore picks. Conversely, losses were felt in Australia, where an extremely unhelpful currency effect dampened our outperformance, with the Australian Dollar touching its lowest level in 10 years. From a sector perspective, an excellent stock selection effect within Consumer Discretionary names drove outperformance, while Industrials also added. Picks in Communication Services (primarily owing to Australian and South African names) detracted the most, as did an underweight allocation here.

*Sources : RAM Active Investments