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RAM AI trio forced to trim Turkey allocation

RAM AI trio forced to trim Turkey allocation

The failed Turkish coup has forced RAM Active Investments' Citywire + rated trio to cuts into is overweight in Turkey despite strong performance by the market over the start of the year.

Speaking to Citywire Switzerland, Emmanuel Hauptmann said there had been strong buying opportunities in the market prior to the coup attempt and Turkish exposure in the RAM (Lux) SF-Emerging Markets Equities fund was increased over June.

Having highlighted consumer discretionary and industrials as attractive in a conversation two weeks ago, Geneva-based Hauptmann had said: ‘In the emerging equities universe, we found the Turkish market to be very interesting post the Turkish lira depreciation last summer leading us to allocate to a number of attractively valued stocks with still relatively resilient earnings momentum.’

This had seen the fund started the year with a pronounced overweight to Turkey compared to the benchmark, which was steadily built up over the past six months. However, this bullishness was cut short following the events of July 15, which forced the managers to reduce exposure from 9% to 7.5%.

Commenting on the recent reduction, Hauptmann said: 'Our stock selection in Turkey is still significantly up year-to-date and outperforms the broad Turkish stock market, but the negative allocation effect this month mean the country is now a negative contributor to relative performance vs. MSCI Emerging Markets since the beginning of the year.'

Of the fund’s Turkey exposure, allocation to financials suffered the most following recent events, while industrials, consumer discretionary and materials stocks remained resilient during the correction, according to Hauptmann. The fund was rebalanced towards China and South Korea as the managers slightly reduced their large underweights in both countries.

Hauptmann manages the fund alongside Maxime Botti and Thomas de Saint-Seine. It returned 1.7% in US dollar terms over the three years to the end of June 2016, which compares to a fall of 3.5% by its Citywire-assigned benchmark, the MSCI EM (Emerging Markets) TR USD, over the same timeframe.

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