30 August 2019

Maxime Botti

The RAM (Lux) Systematic Funds - Global Sustainable Income Equities Fund ended down -2.95%* (Ip USD class - net of fees), underperforming the MSCI World High DY TRN index which returned -1.62%. August proved to be a demanding month for global equity markets. Despite the month’s late rally, global equities finished the month in the red, as persistent Trade War clouds remained, hamstringing the market, while the inversion of part of the U.S. Treasury curve (a historical indicator of a looming recession), sparked fears among investors. Broadly we saw emerging outperform developed market peers, while the U.S. and Europe outperformed Asia. The late August rally signalled a clear “risk on” mode to investors after President Trump tweeted that China were ready to come back to the negotiating table following a phone call. This tweet was enough to turn markets from red to green, with markets seemingly looking for reasons to rally. Our long exposure to Consumer Discretionary and Financials, in addition to our underweight to Consumer Staples weighed, as did our over exposure to Asia and subsequent under exposure to Europe. In addition, our overweight to mid and small caps broadly detracted, with our underweight to large cap names weighing. On a country basis, the U.S. contained almost all our losses. Here, underweights to Communication Services on a valuation basis, and overweight to Consumer Staples names detracted, while our positive relative overweight to Financials failed to offset losses on a stock selection basis. Conversely, picks in Canada provided some positive alpha, especially Financials names. Broadly, high-beta sectors in Communication Services and Financials detracted the most, while Energy contributed positively. 

*Sources : RAM Active Investments.