Commentaries

11 April 2019

Thomas de Saint-Seine

RAM Active Investments RAM (Lux) Systematic Funds - Emerging Markets Core Equities Maxime Botti Partner & Senior Systematic Equity Fund Manage

The RAM (Lux) Systematic Funds – Emerging Markets Core Equities Fund fell by -1.06%* (Ip USD Class – net of fees) in March, underperforming the MSCI Emerging Markets TRN which was up 0.84%. Markets appear caught between incoming data that suggests decelerating global growth, and the Fed’s dovish tones, which continue to be supportive of risk assets. We believe that the sustained neglect to a slew of weakening macroeconomic data points to an extremely complacent market. March’s key underlying theme was the stark underperformance of Value vs Growth stocks, with the latter continuing to trade at stretched levels particularly across both the IT and Communication Services sectors in Asia, our models were naturally diversified away from these hot-spots. One example of this weakening macroeconomic data was March’s Europe manufacturing PMI, which fell to just 45 (where 50 indicates stability), with forward-looking indicators suggesting that growth could be even weaker in the second quarter. Our Fund’s overweight exposure to Brazilian names, particularly IT and Consumer Discretionary, detracted markedly, as did our underweight to China’s Communication Services sector, which recorded a stellar month. A negative stock selection effect in Chinese Financials and Brazilian Materials names also weighed heavily over the month. Elsewhere, we also suffered from our relative underweight to India as well as a negative currency effect. Within India, our considerable underweight to Energy and Financials names detracted, with both sectors rallying strongly. Our Fund’s major positive was our allocation effects to South Korea (underweight) and Australia (overweight). On a sector basis, Financials were our Fund’s most significant detractor, while our stock selection within Industrials proved to be positive overall.

*Sources : RAM Active Investments