Commentaries

9 August 2019

Thomas de Saint-Seine

RAM Active Investments RAM (Lux) Systematic Funds - Emerging Markets Core Equities Maxime Botti Partner & Senior Systematic Equity Fund Manage

The RAM (Lux) Systematic Funds – Emerging Markets Core Equities Fund fell -2.19%* (Ip USD Class – net of fees) in July, underperforming the MSCI Emerging Markets TRN which was dropped by -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 struggle amid the gyrations exhibited in July, as volatility picked up at the end of the period. Growth continued to dominate again over the month, as the risk-on period continued unabated. From a broad country perspective our relative underperformance can be attributed to negative stock selection effect across both China and South Korean names. Within the latter, we felt losses across Consumer Discretionary, Financials and Industrials picks, especially evident in our Value and Momentum engines. In the former, our significant relative underweight to Communication Services names detracted markedly, with the sector showing some resilience despite the down market.

*Sources : RAM Active Investments