Commentaries

13 February 2019

Thomas de Saint-Seine

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

 The RAM (Lux) Systematic Funds - Long/Short Global Equities Fund fell by -1.73%* (PI USD class – net of fees) in January. Global stocks roared to life in January as investor concerns on the twin threats of the Fed’s overly aggressive rate-hiking and China’s economic slowdown, abated. Stocks in the U.S. surged owing to relatively strong corporate earnings, continued optimism about America’s economy and a big shift in the Federal Reserve's interest rate plans for 2019. Typically, this type of strong market recoveries can prove most unhelpful for our style; and so, it proved with our beta-neutral approach on the short side suffering from the massive upside performance of low-quality, high-risk names in the index. We also witnessed short covering within the market, with many hedge funds cutting their exposure amid this environment. Canada, Australia and Japan all contributed positively, while our U.S. picks (Energy and Communication Services) led the way on the long side of our book. However, shorts in the U.S. eroded the alpha generated in our longs, meaning the U.S. was a negative contributor. On a sector basis, Industrials and Health Care offset the positive gains generated by our longs, which was the case across all sectors. Amid this market environment, we can expect the continuation and perhaps even a rise of volatility, which could create a fertile stock-picking environment for our short engines.

*Sources : RAM Active Investments