9 August 2019

Thomas de Saint-Seine

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%. Despite a relatively muted start to the month, July witnessed some seismic shifts at the end of the period. In the space of three days, we witnessed a reignition of the global trade war with President Trump threatening a 10% tariff on a further $300bn of Chinese goods, and the Fed’s disappointing rhetoric amid a cautious outlook. Earlier in the period, the ECB kept their powder dry and maintain rates, but signaling its intention to introduce a comprehensive easing package, including rate cuts and the restarting of asset purchases (QE). Elsewhere, the S&P500 moving above the 3000 mark, establishing a new historical high, while conversely, China’s economy quietly slipped to its lowest growth in 27 years, 6.2%. The market reaction to these figures was relatively muted. From a regional perspective, losses were keenly felt across our North America exposure, with U.S. (Consumer Staples) and Canadian (Industrials) names weighing the most over the month, as global consumer discretionary names rallied strongly. Our overexposure to Asia and conversely our underweight to Europe and North America (the latter not significantly) also weighed, while large caps outperformed their small and mid-peers, which also cost us. Elsewhere, in our European model we felt losses from our significant underweight to Swiss Consumer Staples names, which rallied strongly. In terms of positive alpha, our models found some Industrials names in the UK at attractive valuation levels, while French energy names also added from an underweight allocation perspective. From a sector perspective, losses were hardest in the Consumer Staples sector, owing to a significant underweight here. Our prodigious selection of Consumer Discretionary names helped to boost performance over the month.  

*Sources : RAM Active Investments.