Commentaries

2 July 2019

Emmanuel Hauptmann

RAM Active Investments  RAM (Lux) Systematic Funds - European Equities Maxime Botti Partner & Senior Systematic Equity Fund Manager

The RAM (Lux) Systematic Funds – European Equities Fund finished up +4.15%* (Ip-EUR class – net of fees) vs +4.43% for the MSCI Europe TRN. June saw stocks attempt to recoup May’s losses, as European markets embraced the dovish tone from the global central banks, with interest rate cuts from the Fed expected next month and the ECB’s comments also helping to propel the marker higher as almost all sectors enjoyed this broad rally. Trade concerns, political indecision and slowing growth, all issue that have continued to plague global markets at various points in 2019, continue to linger, yet European bourses are up 16% so far this year. Nothing illustrates this decoupling so starkly as the tug of war between a deteriorating macro backdrop (German PMI contracting for a sixth consecutive month to 45) and risky assets performance. Elsewhere, the growth vs value performance gap continues to widen to extreme levels, with no signs of this phenomenon abating and valuation discrepancies reaching unprecedented levels. These indicators should act as a cautionary note to investors in fully understanding their portfolio risk. Ultimately, it was little wonder that our Value and Defensive engines were the month’s relative laggards. The positive reversal of our Machine Learning Strategy was impressive; shifting from one of our biggest laggards to the month’s strongest rapidly. Elsewhere, Momentum outperformed, a continuation of a theme we’ve witnessed since the turn of the year. On a sector basis, both Industrials and Energy names drove Fund performance, with our quality bias here paying dividends. Within Energy, our ML Strategy’s positioning and selection effect within the sector helped to capture dispersion amongst a handful of names driving gains which were largely buoyed by a strong month for the oil & gas sector. Within Industrials, our significant overweight within the Nordic region also produced alpha; with our Momentum and ML engines particularly profitable. Conversely, we saw detractors emanating from our Consumer (Staples and Discretionary) allocations; a theme which has been prevalent throughout 2019.  

*Sources : RAM Active Investments