Commentaries

5 August 2019

Thomas de Saint-Seine

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 -0.03%* (Ip-EUR class – net of fees) vs +0.30% for the MSCI Europe TRN. In stark contrast to June’s strong performance, July began as a relative unremarkable month. However, investor attention centered upon both the Federal Reserve and the ECB, both of whom were expected to continue their accommodative stance. The ECB kept interest rates unchanged but signaled its intention to introduce a comprehensive easing package in upcoming meetings, including rate cuts and possibly the restarting of asset purchases (QE). 2019 has seen European equities thriving by jumping on the bandwagon of a recovering U.S. equity market. The continued disregard for the stark difference in health of the real economy and stock markets appears profound, as manufacturing activity data continues to fall below expectations, and the PMI dropped to its lowest level in seven years across both Germany and the eurozone. Elsewhere, the UK’s newly appointed Prime Minister, Boris Johnson, continued his confrontational stance as the risk of a hard Brexit is now back on the table, with the GBP taking a beating vs the dollar. These ingredients have created a challenging market environment to navigate for active managers. The growth vs value gap continued to widen to unprecedented levels, negatively impacting our Value strategy in July. Momentum performed strongly, especially at the end of the period, as did our Defensive style. Machine Learning also lagged. With our Momentum engine being the best relative performer, we witnessed strong contribution across Italy and Germany, while Sweden also contributed nicely. On a broad country basis, we felt losses emanating from our overweight to and weak selection effect within Belgian Consumer Staples names. Our selection of Swiss Consumer Staples names was the Fund’s biggest detractor, with our significant underweight here the culprit as the sector, led by a handful of names, performed strongly. On the positive side, alpha picks in France helped generate positive gains, reversing the trend of past months.  

*Sources : RAM Active Investments