08/03/2011Elite grade for Carmignac Investissement
Morningstar renews its trust in Carmignac Investissement giving it again the best rating ELITE.
"In our opinion, this global equity fund is one of the best.
Carmignac Investissement indeed embodies the main qualities we like to see in a fund. First of all, its manager, Edouard Carmignac, has many years of experience and, notably, has managed the fund since its launch more than 20 years ago. He follows an opportunistic approach with a long-term, absolute return mindset. With that aim, he bases his approach on his main convictions, which include a strong top-down dimension. The strategy rests on identification, usually upstream and not necessarily in the current trend, of investment themes with medium- and long-term growth potential. So, by the end of August 2009, the portfolio is exhibiting marked sector bets on emerging markets and natural resources, while since March, the team had once again turned positive on a limited number of Anglo-Saxon banks. At the same time, the fund maintains significant exposure (14%) to gold, which it considers to be a significant protective tool. Within these different themes, Carmignac can rely on the best ideas from a solid team of managers and analysts, which was recently strengthened by addition of a very experienced analyst in the financials sector. Due to the fund's considerable size, however, Carmignac selects only securities with sufficient liquidity. This is demonstrated by portfolio's positioning in the large-cap segment of the Morningstar Style Box.
Another fundamental factor that distinguishes this offering is its systematic use of hedging and cash management policies to mitigate market fluctuations. In a bear market, the fund therefore loses much less than its competitors. The fund is more volatile than the average fund in its category, however, due to its sometimes aggressive positioning on strong growth themes. It is therefore intended for long-term investors with a high risk tolerance.
Lastly, management charges borne by fundholders are reasonable. They are accompanied by a performance fee that aligns their interests with those of the manager. This is unfortunately not the case for deducted turnover commissions. Even though we do not like these commissions, which we think are unfair, the fund managed overwhelmingly to overcome this disadvantage. By the end of September 2009, it ranks in the first decile of the category over three-, five-, and 10-year periods.
In view of the size of assets under management, it would be reasonable for the fund to pass economies of scale on to investors. Nevertheless, the experience of the manager and his team, the fund's success over the long term, and the soundness of the investment policy make it an excellent investment. The fund retains the Elite grade."
© 2009 Morningstar
