12 June 2019

Thomas de Saint-Seine

The RAM (Lux) Systematic Funds - Global Sustainable Income Equities Fund fell -5.64%* (Ip USD class - net of fees), underperforming the MSCI World High DY TRN index which was down -4.65%. Global stocks fell sharply following a serene start to the year, as trade tensions ratcheted higher. Developed and emerging stocks were not immune to President Trump’s newly enacted tariffs and potential expansion to other countries including Mexico and Australia threatened to further slow global economic growth. Political events also added to market unease as UK Prime Minister Theresa May’s resignation, and elections in Denmark, France, and Italy pointed toward increased nationalism. Australia aside, every single developed and emerging equity market declined, highlighting the year’s rally which has been largely driven by a lack of bad news and not by global growth or individual company fundamentals. Underperformance was attributable to a negative positioning effect in the U.S. and Switzerland, the former due to our significant relative overweight to Consumer Discretionary names and the latter due to our relative underweight to Health Care names. Conversely, our relative underweight to Germany in the Materials sector and our prodigious stock selection in Japan’s Industrials sector helped to pare losses. Performance at the sector level was widely dispersed, with more domestically focused and ultimately lower-risk sectors, outperforming. Our overweight to Financials (UK and Australia) failed to successfully offset losses felt from a selection perspective here, while we also suffered losses emanating from our underweight to Switzerland’s Health Care sector. Our relative underweight to Energy names contributed strongly, helping to provide a source of positive alpha in a difficult month for fundamental stock pickers. 

*Sources : RAM Active Investments.