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Commentaries

2 July 2019

Emmanuel Hauptmann

The RAM (Lux) Systematic Funds - Global Sustainable Income Equities Fund was up +6.01%* (Ip USD class - net of fees), marginally underperforming the MSCI World High DY TRN index which returned +6.40%. 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 higher, with technology names outperforming the broad market, and large-cap defensive sectors that pay relatively high dividends, also posting healthy gains. During these risk-on phases, not led by fundamentals, we typically give back on performance, and June was no exception. Broadly, we suffered from our market cap and regional exposures, but strongly outperformed on a sector basis. In terms of market cap, our models moved from overweight large cap to significantly underweight, which was detrimental, as defensive large cap names generally outperform given the nature of this rally. From a regional perspective, our underweight to Europe and conversely our overweight to Asia also weighed. Sector-wise relative overweights to Consumer Discretionary and subsequent underweight to Staples helped to dampen losses suffered elsewhere. Our underweight to Energy names, and stock selection here, detracted, particularly within the U.S. Finally, a weak selection effect in Japan, and underweight to Germany further exacerbated losses, but our prudent stock selection in U.S. (Materials & Health Care) were highly alpha generative.

*Sources : RAM Active Investments.