Commentaries

15 March 2019

Thomas de Saint-Seine

After having strongly outperformed in January, the RAM (Lux) Systematic Funds - Global Sustainable Income Equities Fund returned 1.46%* (Ip USD class - net of fees), underperforming the MSCI World High DY TRN index which returned 3.09%. Global equities witnessed a stellar February, a continuation of January’s surge in performance. The Federal Reserve’s U-turn since December has continued to support equities, enabling the continuation of their upwards trajectory for a second consecutive month.  Our month’s underperformance was in stark contrast to last month’s, as we witnessed the continuation of the rebound of lower-quality higher beta names, with little fundamental justification for performance. In this environment our income and low risk plays suffered, as did our inherent bias towards high quality stocks, but our yield chasing models worked well. Our European model was at the center of underperformance, with the UK and France selections weighing heavily. We also felt losses stemming from weak selection in our North American model, with both the U.S. (Energy) and Canada (Consumer Discretionary) weighing. On the positive side, selection within Germany proved fruitful, with Consumer Discretionary names boosting returns. From a sector perspective, both Energy and Financials where the biggest detractors despite a strong contribution from U.S. Financials, we suffered significant losses from the UK. Energy names also detracted markedly, with our underweight allocation proving unhelpful here. On the positive side, Consumer Discretionary picks offset a negative overweight allocation, providing some alpha.

*Sources : RAM Active Investments.