Commentaries

2 July 2019

Emmanuel Hauptmann, Thomas de Saint-Seine

RAM (LUX) SYSTEMATIC FUNDS – LONG/SHORT GLOBAL EQUITIES

The RAM (Lux) Systematic Funds - Long/Short Global Equities Fund returned -0.67%* (PI USD class – net of fees) in June. Trade concerns, political indecision and slowing growth all abated in June, as markets were increasingly focused on the rhetoric surrounding the world’s central banks. The Fed reinforced investor expectations for an interest rate cut later this year, while the ECB suggested additional eurozone stimulus could be necessary. Global markets also rallied on news that Beijing and Washington officials would resume their negotiations, after talks faltered in May. The removal of the word “patient” from the Fed’s statement was enough to propel both developed and emerging markets even higher, with technology names outperforming the broad market, and large-cap names also posting healthy gains. Despite our excellent start to the month, ultimately following the central banks’ comments (both the Fed and ECB), our Fund’s alpha was eroded by our short engines and short indices, especially within Europe. From a strategy perspective, both our Defensive/Low Vol and Value engines struggled, the former owing the velocity of the market’s trajectory and the latter owing to the continued widening of the performance between value and growth names. Conversely, our long Momentum engine outstripped the market, generating alpha for the Fund. On the short side, our Short Momentum, specifically our DASP engine, weighed. The engine looks to identify those names with deteriorating earnings, negative analyst sentiment and price momentum. Thankfully we witnessed positive alpha within our Short Value, especially across picks in Asia (both developed and emerging), especially South Korean picks. At a broad sector level, both Energy and Materials picks cost us, especially within our short engines, which failed to capture names with negative fundamentals and price trends. Conversely, we profited from stock selection within both Industrials and Financials, especially within North America. 

*Sources : RAM Active Investments