Celebrating Carmignac Emergents

20 Years

Begin the journey...

'Blessed are the curious, for they will have adventures' - Unknown

We have been sailing the emerging world for the past 28 years on the lookout for growth opportunities. In this time we have stopped at many shores and gained wisdom from a number of economic and political encounters. When Carmignac was launched in 1989, our ambition was to learn more and discover new investment opportunities. It still is today.

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Emerging markets have remained one of our core investment themes since those early years. We have always believed in their growth potential, regardless of the global backdrop and through times when others found the investment case harder to see. As the name suggests, emerging market economies are in a development phase. Rising living standards, growing middle class, opening of financial markets, changing consumption habits, urbanisation, and many other features make them a rich hunting ground for investors looking for growth. But with growth comes risk.

Risk explains why many investors have been reluctant to participate in this universe. Although the growth potential of emerging markets is attractive, for many investors, the associated economic, political and financial risks are too great. We beg to differ. We see emerging markets as offering fruitful rewards, as long as the risks are understood, acknowledged and appropriately managed. This is why investing in emerging markets must be done with the right partner. In 1997, we launched a dedicated emerging market fund, Carmignac Emergents, with the aim to capture this growth and deliver it back to our investors.

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Navigating through emerging markets

Select a year:

1997 - A rough start

1997 presented the first test for Carmignac Emergents. The Fund's launch in February was followed by the South East Asian financial crisis a few months later, triggered by the collapse of the Thai baht. Due to large outflows of foreign investments, the Thai government was forced to unpeg its currency from the US dollar. The crisis spread rapidly to neighbouring countries, then to emerging markets as a whole, and even affected developed countries.

2000 - Stormy weather

Performance: -23% Reference indicator(1): -27%

The millennium year was a difficult year for emerging markets. Interest rate hikes in Europe and the US led to a global liquidity crisis, to which emerging countries were particularly sensitive. A higher oil price weighed heavily on the external trade balances of oil importing emerging countries and an economic slowdown in the US weakened exporting economies, particularly in Asia. More generally, equity market volatility and their disappointing performances left investors feeling increasingly risk averse and made them pull out from emerging markets they felt unfamiliar with.

2005 - Surfing on the wave

Performance: +59% Reference indicator(1): +50%

For the third year in a row, emerging markets closed 2005 with a rise and a notable outperformance versus developed markets. Some markets particularly stood out: Brazil and Mexico benefited from the positive effects of more accommodating monetary policy and a sharp appreciation in their currency, South Korea experienced improving consumer spending and increasing exports, and Russia advanced thanks to a brighter macroeconomic environment.

2008 - A bumpy ride

Performance: -56% Reference indicator(1): -52%

Apart from the downward pressure exerted by the Global Financial Crisis, the fragility of emerging markets was due to rising inflationary pressures (largely fuelled by soaring food prices), the decline in international trade (exports fell 40% in Taiwan over the year), the fall in commodity prices (strongly affecting the Russian market), lower exchange rates and a reduction in external finance (accentuating the situation in countries with economic imbalances or high debt).

2012 - Winds of change

Performance: +17% Reference indicator(1): +13%

After a troubled 2011, winds of change carried emerging markets in 2012. Overall, the main emerging markets were not the best performers, smaller markets such as Venezuela or the Philippines were way ahead. However, it was an important political year for many of the larger countries: Xi Jinping was confirmed as China's leader, Peña Nieto was elected President of Mexico, Mukherjee became President of India, while Putin claimed the Russian presidency. All of the new leaders announced a set of long-term structural reforms, with the aim to significantly boost domestic growth.

2015 - Choppy Seas

Performance: +5% Reference indicator(1): -5%

2015 is to be remembered for the sharp correction of the Chinese markets caused by the sudden devaluation of the Renminbi and the burst of the A-share market bubble(2). This, combined with falling oil prices, the fear of a potential interest rate increase from the US Federal Reserve and the lack of support from global trade, led to capital outflows from emerging markets, pressuring emerging countries and further deteriorating already weak macroeconomic fundamentals and local currencies.

2017 - Emerging markets back on track

Performance: +19% Reference indicator(1): +21%

Emerging markets enjoyed a highly favourable environment in 2017, outperforming developed markets for the second year in a row, despite escalating tensions between the US and North Korea. The inherent strengths of emerging economies – strong current accounts and stable local currencies – were underpinned by a number of macroeconomic tailwinds. These included: a broad-based cyclical recovery that led to faster global growth, solid Chinese indicators, a weaker US dollar and a rebound in emerging world exports.

Carmignac Emergents: +523% Reference indicator(1): +152%
1997 2000 2005 2008 2012 2015 2017 0 100 200 300 400 500 600

(1) Reference indicator: MSCI Emerging Markets (USD) calculated with net dividends reinvested. It is calculated by MSCI in dollars, and then converted into euro (Bloomberg code NDUEEGF). Source: Carmignac, 29/12/2017. Performances of euro share class (A EUR acc). Performances as of end of December of each year. Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding applicable entrance fee acquired to the distributor). The Fund has other shares in other currencies. The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency-hedged. (2) Chinese domestic equity market.

Carmignac Emergents in a nutshell



Carmignac Emergents aims to benefit from the dynamism and growth potential of emerging markets by deploying an active asset allocation across the most attractive countries, sectors and companies of its universe. Benchmark agnostic, it has no geographic, sector or market capitalisation restrictions, although it targets mainly mid- and large-capitalisations as they allow greater control of the liquidity risk.



The Fund's country selection can differ substantially from that of its reference indicator. This allows us to freely follow our convictions. We can hold a significantly underweight position in a country because we think it is best to avoid it, or increase our weighting in another country because we have reasons to believe it would benefit the Fund.



Emerging markets are volatile and can, in the blink of an eye, go from all-time highs to record lows. We see risk and volatility management as our core responsibility towards our investors. Our intention is to capture the most from market upsides while limiting the impact of drawdowns. To fulfil this purpose, the equity exposure of the portfolio is actively managed. We keep a high level of exposure to emerging markets, but may, in periods of strong market turbulence, reduce equity risk in order to limit potential losses (minimum exposure: 60%).



We seek to choose the most attractive part of the Fund's investment universe by focusing on underpenetrated sectors, where we can find companies with decades of growth ahead of them. Within these, we pinpoint 'capital-light' businesses with strong balance sheets, offering attractive and sustainable cash flow generation, capable of self-financing their growth. In line with our meticulous stock selection, we also follow a socially responsible approach, incorporating Environmental, Social and Governance (ESG) criteria in our investment process.

Our convictions are here to stay

Our high conviction approach to emerging market investing consists of buying the shares of companies that we believe will grow and generate long-term profitability, regardless of general market direction. This means we do not base our investment decisions on market 'noise' but rather on in-depth macroeconomic and company-specific analysis.

This approach is reflected through our concentrated, low turnover portfolio. On average, we select 40 to 60 companies that in our view reflect the high potential of the emerging market universe over the long term. And when we find great companies to invest in we stick with them. As of today(3), three of our top holdings are companies we have owned for nearly 20 years(4).

Grupo Financiero Banorte S.A.B. de C.V.

Since 1997

The group is one of Mexico's largest financial institutions. It offers an array of banking, leasing, insurance, pension and brokerage services. For the past two decades, the company has strongly benefited from the underpenetration of the financial and banking sector in Mexico and from its strategic alliances to continue to grow and post attractive returns for shareholders.

Taiwan Semiconductor Manufacturing Co.

Since 1998

The company is the undisputed global leader in the manufacture of integrated circuits (micro processing chips). Along with its impressive capital strength and financial discipline, the firm has proved its ability to adapt in a fast-evolving environment. We believe it will continue to grow and benefit from the current trend of global digitisation.


Since 1999

The firm is the global market leader in high-tech electronics manufacturing and digital media, headquartered in Korea. When we first invested in the company, we recognised its dedication to developing innovative products. Today, we believe it will remain at the forefront of innovation, in a constantly evolving world.

(3) As of 29/02/2017. (4) These holdings may have been sold and bought again between their first entry in portfolio and today. The analysis of financial instruments in this presentation was not prepared in accordance with applicable regulatory provisions regarding the independence of financial analysts. The Management Company is not subject to the prohibition of entering into transactions in connection with the relevant instruments before the presentation of this material. This material is presented for illustrative purposes only to point out certain instruments which are (or which were) in the portfolios of certain Carmignac Funds, and it is does not aim to promote a direct investment in the instruments mentioned herein. The portfolios of Carmignac Funds may change without previous notice.

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Main risks of the fund

Scale Risk

Equity: The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization.

Emerging Markets: Operating conditions and supervision in 'emerging' markets may deviate from the standards prevailing on the large international exchanges and have an impact on prices of listed instruments in which the Fund may invest.

Currency: Currency risk is linked to exposure to a currency other than the Fund's valuation currency, either through direct investment or the use of forward financial instruments.

Discretionary management: Anticipations of financial market changes made by the Management Company have a direct effect on the Fund's performance, which depends on the stocks selected.

The Fund's capital is not guaranteed.

*SRRI from the KIID (Key Investor Information Document). ​Category-1 risk does not mean a risk-free investment. This indicator may change over time.

(5) Reference indicator: MSCI Emerging Markets (USD) calculated with net dividends reinvested. It is calculated by MSCI in dollars, and then converted into euro (Bloomberg code NDUEEGF).

Xiavier Hovasse
Xavier Hovasse Head of Emerging Equities, Fund Manager
David Y Park
David Park Fund Manager

Reminder: Carmignac Emergents' strategy is also available through Carmignac Portfolio Emergents, sub-fund of Carmignac Portfolio, a Luxembourg SICAV. Both Funds share the same investment strategy, portfolio construction and management process.

The Fund was launched on February 3rd, 1997. It aims to outperform its reference indicator(5) over its recommended investment period of five years, with lower volatility.