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Commentaries

8 October 2019

Emmanuel Hauptmann

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 finished up 1.54%* (Ip USD Class – net of fees) in September, underperforming the MSCI Emerging Markets TRN which returned 1.91%. Emerging markets underperformed their developed counterparts in September, as investors in the region continued to wrestle with trade and political uncertainty. September witnessed Central Bank’s continuing to dictate the market’s mood, with eight of the top 10 developed market central banks meeting over the month. While only the ECB, Fed and Australia reduced their target policy rates, the forward guidance from other central bankers suggests broad-based easing in the months ahead as the global economic outlook continues to deteriorate. Elsewhere, the price of crude oil soared mid-month following a drone attack on Saudi Arabia’s oil production facility. In terms of economic health, global manufacturing data experienced its sharpest and most geographically widespread downturn in over six years, as the US-China trade war weighed. Our Fund’s performance was hurt by Momentum’s significant underperformance. Here, a perceived lull in U.S.-China trade tensions eased market fears about an economic downturn, prompting a rebound in bond yields. The result was a shift in equity factor leadership; while value recovered, momentum stumbled. Our Australia picks continued to bring alpha to our Fund, with allocations to Materials and Financials names boosting performance. Selection of Taiwan IT names also helped to deliver positive performance, with fundamentals here particularly attractive, especially within our Value engine. The month’s biggest detractors were Thailand and South Korea. In the former, both our significant relative overweight and selection of Real Estate names detracted markedly. Sector-wise, Real Estate, Energy and IT picks all weighed over the month, while Financials helped to offset some of these losses.

*Sources : RAM Active Investments