Commentaries

15 March 2019

Thomas de Saint-Seine

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

The RAM (Lux) Systematic Funds – Emerging Markets Equities Fund ends up the month almost in line with its benchmark, returning 0.10%* (Ip USD Class – net of fees), vs the MSCI Emerging Markets TRN$. Concerns over a potential sharp rebound in U.S. data, which would likely cause the dollar to rally and U.S. interest rates to rise, were the major concerns for emerging markets investors in February. Despite this headwind, the asset class was up sharply in the first part of the month, with Chinese stocks leading a sustained rally as optimism grew on positive talks between Trump and China’s top trade negotiator. However, this optimism soon abated leaving emerging markets trailing their developed counterparts over the month. Our Defensive and Value engines where the month’s primary laggards, while our Machine Learning produced exceptionally strong returns and Momentum performed admirably. From a country perspective, we felt losses within our China & HK underweight and a negative currency effect, with our positive selection here failing to offset losses. Elsewhere our underweight to Brazil’s Consumer Discretionary sector also detracted markedly. On a positive footing, our selection of South African Financials and Materials names helped to generate gains. At the sector level, we felt losses from our underweight to Consumer Discretionary names, while our Energy selection also detracted. Conversely, stock selection in and our significant underweight to Financials helped to boost portfolio returns, as did our selection of Communication Services stocks. Finally, thanks to its fundamental and all-caps profile, we think our systematic approach is currently offering a unique appealing profile to diversified risk on Emerging Markets and to play the convergence of valuation. 

*Sources : RAM Active Investments