Commentaries

12 June 2019

Thomas de Saint-Seine

RAM Active Investments RAM (Lux) Systematic Funds - Long/Short Emerging Markets Equities funds Maxime Botti Partner & Senior Systematic Equity Fund Manager

The RAM (Lux) Systematic Funds - Long/Short Emerging Market Equities Fund returned +1.63%* (I USD class – net of fees) in May. Following four consecutive months of positive performance for emerging markets, the winds changed abruptly in May, as we witnessed the reignition of the U.S./China trade war. President Trump’s astonishing tweets suggesting that a deal with China was off the table and his plans to increase tariffs and name-shame specific companies, such as Huawei, completely wrong-footed market participants. Markets also digested Brazil’s Q1 growth numbers (putting it on a path to imminent recession), India’s downgrade by the U.S. (no-longer considered a developing economy) and Saudi Arabia’s entrance into the index (to the detriment of South Africa). Our Fund’s strong positive performance was largely attributable to a solid stock selection effect across all market cap segments, coupled with the asymmetrical nature of our engines across both sides of the book. While Value picks were wrecked across European and U.S. markets, they fared better in EM, while our Machine Learning (long and short) and Short Momentum where highly alpha generative, as the market began to display signs of dispersion. From a country perspective, while South Korean longs weighed, we witnessed tremendous alpha generated by our short engines, especially within high-beta technology names. Our Fund’s asymmetry was showcased within China & HK as our long pics weighed (albeit falling less than the market), our short engines were able to find names with negative fundamentals and price trends or those with lower quality of earnings, more than offsetting our long book’s performance. Elsewhere short picks in Australia further boosted returns, as did longs in Brazil’s Industrials and Financials sector. 

*Sources : RAM Active Investments