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The top-performing group in GEM equities revealed

The top-performing group in GEM equities revealed

Over the past quarter, emerging markets have extended their recent upward trend and continued to benefit from high real yields.

This period of renewed interest in the sector comes at a time when developed markets are looking correspondingly uninteresting. With improving performance, the global emerging markets sector has seen increasing levels of inflows as investors shift their focus.

There is an abundance of attractively-valued stocks and the rally is forecast to continue, supported by the Fed’s ongoing accommodative stance and lower valuations.

Against this positive backdrop we highlight one of the strongest investment groups operating in the space based on our unique analysis, which gives Citywire Group Ratings to those companies with consistent long-term outperformance in the sector.

Top performers

Maxime Botti, Emmanuel Hauptmann and Thomas de Saint-Seine are the trio behind RAM Active Investments’ Platinum rating in the global emerging market equities sector.

They co-manage two funds: RAM (Lux) SF-Emerging Markets Core Equities and, the larger of the two in terms of AUM, RAM (Lux) SF-Emerging Markets Equities.

Both strategies contribute to their ratings analysis in the sector and they are ranked in second position against their peers for their risk-adjusted performance over the past seven years to the end of August.

All three managers have been active in the space for just over seven years and 2015 proved to be one of the toughest for the trio and GEMs managers in general. The managers had their worst year so far during this period and the RAM (Lux) SF-Emerging Markets Equities fund lost 12%.

To help correct this, at the end of 2015 they went overweight Brazil for the first time since the strategy’s launch. This move reflected the bottom-up opportunities emerging among Brazilian exporters, as well as challenges faced by China.

The fund was hit by its positions in Taiwan after the summer of 2015 and the managers had to reduce their exposure by around 4% to mitigate the negative effect of the country’s strong ties with China.

However, Taiwan still remains their top country allocation and they hold an overweight position there relative to the MSCI Emerging Markets index.

This year they have gradually reduced holdings in Brazil to an underweight position after riding a politics-led rally triggered by the impeachment proceedings against President Dilma Rousseff.

In terms of regional allocation the managers continue to favour the more stable countries, such as Taiwan, Australia, Singapore and Hong Kong.

The trio’s impressive outperformance led them to close the RAM (Lux) SF-Emerging Markets Equities fund to new investors in August following strong inflows. However, their second strategy, the RAM (Lux) SF-Emerging Markets Core Equities fund, remains open.

This article originally appeared in the October edition of Citywire Selector magazine.

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