Commentaries

9 August 2019

Thomas de Saint-Seine

RAM Active Investments RAM (Lux) Systematic Funds -Emerging Markets Equities

The RAM (Lux) Systematic Funds – Emerging Markets Equities Fund fell -1.75* (Ip USD Class – net of fees), narrowly underperforming the MSCI Emerging Markets TRN$’s return of -1.22%. In stark contrast to June’s strong performance, July began as a relative unremarkable month. However, investor attention centered upon global central banks at the end of the period, whom were expected to continue their accommodative stance. With all eyes on the Fed, as expectations of a rate cut and further dovish rhetoric were heavily priced-in, markets were left disappointed amid a cautious outlook. July also witnessed the reemergence of the global trade war with President Trump threatening a 10% tariff on a further $300bn of Chinese goods, as well as escalating geo-political issues across Hong Kong (protests), Iran (claimed drone shooting) and North Korea (missile testing). In the meantime, China’s economy quietly slipped to its lowest growth in 27 years, 6.2%. The market reaction to these figures was relatively muted. Factor-wise, value has continued its underperformance vs growth, maintaining the disconnect between the two at extreme levels, a phenomenon we’ve previously communicated on. Elsewhere, we saw our Momentum engine perform admirably amid the gyrations exhibited in July, as volatility picked up at the end of the period. Machine Learning was the month’s relative laggard but remains our strongest performer in 2019. From a country perspective, our losses were contained in China and South Korea names. In the latter we saw our overweight to Industrials names weigh, as did our selection of Consumer Discretionary stocks, which benefited broadly from consensus-beating second-quarter corporate earnings reports. On the positive side, Brazil and Thailand delivered alpha, owing to a helpful combination of overweight picks in Utilities and Consumer Staples in the former, while prudent stock selection in Consumer Staples in the latter, drove gains. From a sector perspective, alpha was generated across Consumer Staples and Financials picks, while IT and Communication Services weighed.

*Sources : RAM Active Investments