Commentaries

30 August 2019

Maxime Botti

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 down -1.55%* (Ip-EUR class – net of fees) vs -1.44% for the MSCI Europe TRN. The havoc which occurred in the first part of the month eventually moderated, as where previously stocks were a little less sensitive to the trade war noise, seemingly found a floor. While the month’s sell-off has now put cyclical names at their lowest relative level to defensive peers in over three years. Markets appeared back to “risk-off” mode as the resumption of the U.S./China trade war, a less dovish Fed and decidedly underwhelming economic data pushed markets lower. However, a late August rally, as trade hopes increased, signalled a return to “risk on” again, creating a challenging stock picking environment for our Fund. On the macro front, eurozone economic data was soft, showing Q2 GDP growth of just 0.2% quarter-on-quarter (or 1.1% year-on-year). Elsewhere, we continue to observe a mega-cap quality premium, with these household defensive names producing a stellar month their valuations have risen in tandem, and coupled with our Fund’s natural diversification, it meant we were unable to capture this performance trend in its entirety. From an engine perspective we again witnessed Value (and subsequently Machine Learning) underperform, while Momentum performed strongly, and Defensive provided some portfolio ballast. Country-wise, we benefitted from a positive selection effect across UK, Italy and Spain. Within the UK, it was our Financials underweight and prudent stocks selection here which drove gains, as well as IT picks. Conversely, our underweight to and weak selection of Swiss Consumer Staples names where the primary laggard here. On a sector basis, our Energy and Materials names produced significant alpha for the Fund, while Health Care and Consumer Staples picks weighed.

*Sources : RAM Active Investments