Commentaries

13 February 2019

Thomas de Saint-Seine

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

The RAM (Lux) Systematic Funds – Emerging Markets Equities Fund underperformed its benchmark, returning 6.69%* (Ip USD Class – net of fees), vs the MSCI Emerging Markets TRN$ which returned 8.76%. The region witnessed the continuation of a tremendous rally over the last six weeks, as previous global issues abated, and investors embraced the Federal Reserve’s patient stance and dovish tones. Typically, this type of strong market recovery can prove most unhelpful for our style with a strong fundamental bias; with rebounds of this nature highly unselective. Naturally, our alpha engines struggled to keep pace in a rising market, with our Defensive and Momentum engines lagging, while our Value and Machine Learning engines both performed admirably. January also witnessed the continuation of the small and mid-cap underperformance versus their large-cap counterparts, a phenomenon we’ve observed for over three years now. However, we’re unwavering in our all-cap approach to investing in emerging markets, with valuations levels at their most compelling since we began managing this Strategy back in 2009. At the country level, both China and South Korean where the primary detractors, with the former country enjoying a tremendously profitable month, and our underweight consequently detracting markedly. Within South Korea, our underweight to IT names detracted markedly, as did stock selection within the Communication Services sector. Conversely, we saw strong performance from Taiwan, with Value and Momentum picks proving a welcome boost. At the sector level, losses emanated from Consumer Discretionary, IT and the Communication Services sectors. However, our stock picking within Utilities proved beneficial.

This month we have added the MSCI equally weighted version of our Fund’s benchmark. This is in response to our investor’s request desiring further comparison elements in our reports, given our Fund’s more diversified approach that have significant stock specific cap by line.

*Sources : RAM Active Investments