Carmignac

Carmignac Patrimoine: Letter from the Fund Managers

  • +0.18%
    Carmignac Patrimoine’s performance

    in the 2nd quarter of 2023 for the A EUR Share class.

  • +1.30%
    Reference indicator¹’s performance

    in the 2nd quarter of 2023.

  • +3.37%
    1 year performance of the Fund

    vs +1.84% for the reference indicator.

Over the period, Carmignac Patrimoine recorded a performance of +0.2%, below that of its reference indicator (+1.3%)1.

Market environment during the period

The resilience of economic growth in the US has continuously surprised investors over the quarter. Indeed, despite incrementally tighter financial conditions, the US consumer demand and employment trends have remained steady. In Europe, the economy is slowing down as the monetary policy tightening is increasingly feeding through the real economy. However, both in the US and Europe, core inflation remains sticky, leading Central banks to reinforce their determination to maintain a restrictive monetary policy. In the East, China’s economic momentum has stalled, adding to a geopolitical backdrop that remains tense.

In this environment, we saw stock markets surpassing one-year (and even multiyear) highs while uncertainty on interest rates largely prevailed. Noteworthy that the US equity move has been mostly driven by the artificial intelligence (AI) investment theme with the Big Tech 72 reaching new highs.

How did we fare in this context?

During the second quarter, the Fund was being positioned for a less favorable economic outlook in the second half of the year due to the growing effects of monetary and fiscal tightening. As market participants focused on the resiliency of US growth, this positioning did not allow the fund to fully capture the market rebound. Indeed, our gold exposure as well as the long duration on sovereign rates weighed on absolute performance.

Our Chinese exposure was the biggest detractor over the period. Despite the fact that our investments are focused on domestic companies with sound fundamentals and highly attractive valuations, the negative news flow on both growth and geopolitics kept hurting the Chinese equity market, without discrimination.

However, our credit and EM debt exposures as well as our stock picking in healthcare helped the fund to generate positive returns.

Outlook

On the macro-economic front, resilient economies and sticky inflation mean central banks won’t pivot in H2 2023 in our opinion. Indeed, after a seemingly ‘immaculate’ disinflation to 3% in the next 12 months, returning to the 2% target will not be quite so smooth. It will require an increase in unemployment to typical recessive levels by pushing central banks’ terminal rate higher. Therefore, we should see a synchronized slowdown in late H2 2023, however with different endpoints: recession in the US, stagnation in Euro area and subdued growth in China. In China, however, the disappointing economic data over the last couple of months had one silver lining for markets: it raised the chances that the government would step in to lead a policy-driven growth cycle.

Such an environment calls for a selective approach to investment and also for an active management of exposures. In equities, markets are expected to continue walking a tightrope as long as the economy slows but doesn’t fall off a cliff, while the pace of disinflation keeps rates, and hence equities in check. However, given the slower economic backdrop we’re leaning towards defensive stocks and sectors.

In fixed income, central banks’ dependency on economic data means one has to prepare for a variety of scenarios. Confirmation of the economic slowdown and the pace of disinflation will push interest rates to much lower levels across the board. Conversely, if the economy shows even greater signs of resilience, this would lead central bankers to raise policy rates further, which in turn would weigh on the longest-term bond yields as more pronounced tightening of monetary policy increases the likelihood of the economy contracting sharply.

Positioning

Our main performance drivers for the next months are the following:

  • Fixed income:

Sovereign - Long duration positions based on less favorable economic outlook (anticipated synchronized global growth coupled with still hawkish central bank policies). Our long rates’ positioning is spread between the US, Europe (both core & non-core) and EM. This positioning also counterbalances our risky asset investments (equity and credit).

Credit - Long credit positions for advantageous carry levels and potential value spread, especially in sectors like financials.

  • Equities: diversified equity portfolio made of companies able to outperform in downturns (tech/tech-related names marrying AI-driven growth and higher profitability, healthcare, staples, long cycle quality industrials). Complemented by a gold exposure.

  • Currencies: Long euro exposure.

1Source: Carmignac as at 30/06/2023. Reference indicator: 40% MSCI ACWI (USD) (Reinvested net dividends) + 40% ICE BofA Global Government Index (USD) + 20% ESTER capitalised. Quarterly rebalanced.
2Big Tech 7: Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia and Tesla.
Source: Carmignac, 30/06/2023, portfolio composition may vary over time. Carmignac Patrimoine, A EUR Acc. 1) Reference indicator: 40% MSCI ACWI (USD) (Reinvested net dividends) + 40% ICE BofA Global Government Index (USD) + 20% ESTER capitalised. Quarterly rebalanced. Until 31 December 2012, the reference indicators' equity indices were calculated ex-dividend. Since 1 January 2013, they have been calculated with net dividends reinvested. Until 31 December 2020, the bond index was the FTSE Citigroup WGBI All Maturities Eur. Until 31 December 2021, the Fund's reference indicator comprised 50% MSCI AC World NR (USD) (net dividends reinvested), and 50% ICE BofA Global Government Index (USD) (coupons reinvested). Performances are presented using the chaining method. From 01/ 01/ 2013 the equity index reference indicators are calculated net dividends reinvested. Past performance is not necessarily indicative of future performance. The return may increase or decrease as a result of currency fluctuations. Performances are net of fees (excluding possible entrance fees charged by the distributor).

Carmignac Patrimoine

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Carmignac Patrimoine A EUR Acc

ISIN: FR0010135103

Recommended minimum investment horizon

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Main risks of the Fund

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.

INTEREST RATE: Interest rate risk results in a decline in the net asset value in the event of changes in interest rates.

CREDIT: Credit risk is the risk that the issuer may default.

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.

The Fund presents a risk of loss of capital.

* Risk Scale from the KID (Key Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time.

Carmignac Patrimoine A EUR Acc

ISIN: FR0010135103
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 (YTD)
?
Year to date
Carmignac Patrimoine A EUR Acc +8.81 % +0.72 % +3.88 % +0.09 % -11.29 % +10.55 % +12.40 % -0.88 % -9.38 % +2.20 % +0.54 %
Reference Indicator +15.97 % +8.35 % +8.05 % +1.47 % -0.07 % +18.18 % +5.18 % +13.34 % -10.26 % +7.73 % +0.94 %

Scroll right to see full table

3 Years 5 Years 10 Years
Carmignac Patrimoine A EUR Acc -2.11 % +2.40 % +1.61 %
Reference Indicator +3.47 % +5.68 % +6.50 %

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​Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor).

Source : Carmignac at 31/01/2024 .

Entry costs : 4,00% of the amount you pay in when entering this investment. This is the most you will be charged. Carmignac Gestion doesn't charge any entry fee. The person selling you the product will inform you of the actual charge.
Exit costs : We do not charge an exit fee for this product.
Management fees and other administrative or operating costs : 1,51% of the value of your investment per year. This estimate is based on actual costs over the past year.
Performance fees : 20,00% max. of the outperformance once performance since the start of the year exceeds that of the reference indicator and if no past underperformance still needs to be offset. The actual amount will vary depending on how well your investment performs. The aggregated cost estimation above includes the average over the last 5 years, or since the product creation if it is less than 5 years.
Transaction Cost : 0,63% of the value of your investment per year. This is an estimate of the costs incurred when we buy and sell the investments underlying the product. The actual amount varies depending on the quantity we buy and sell.
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Marketing communication. Please refer to the KID/KIID, prospectus of the fund before making any final investment decisions. This document is intended for professional clients.

This material may not be reproduced, in whole or in part, without prior authorisation from the Management Company. This material does not constitute a subscription offer, nor does it constitute investment advice. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. This material has been provided to you for informational purposes only and may not be relied upon by you in evaluating the merits of investing in any securities or interests referred to herein or for any other purposes. The information contained in this material may be partial information and may be modified without prior notice. They are expressed as of the date of writing and are derived from proprietary and non-proprietary sources deemed by Carmignac to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Carmignac, its officers, employees or agents.

Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency-hedged.

Reference to certain securities and financial instruments is for illustrative purposes to highlight stocks that are or have been included in the portfolios of funds in the Carmignac range. This is not intended to promote direct investment in those instruments, nor does it constitute investment advice. The Management Company is not subject to prohibition on trading in these instruments prior to issuing any communication. The portfolios of Carmignac funds may change without previous notice. The reference to a ranking or prize, is no guarantee of the future results of the UCIS or the manager.

Morningstar Rating™ : © Morningstar, Inc. All Rights Reserved. The information contained herein: is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Access to the Funds may be subject to restrictions regarding certain persons or countries. This material is not directed to any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the material or availability of this material is prohibited. Persons in respect of whom such prohibitions apply must not access this material. Taxation depends on the situation of the individual. The Funds are not registered for retail distribution in Asia, in Japan, in North America, nor are they registered in South America. Carmignac Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. The Funds may not be offered or sold, directly or indirectly, for the benefit or on behalf of a «U.S. person», according to the definition of the US Regulation S and FATCA. The risks, fees and ongoing charges are described in the KID (Key Information Document). The KID must be made available to the subscriber prior to subscription. The subscriber must read the KID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds present a risk of loss of capital.

The Funds’ prospectus, KIDs, NAVs and annual reports are available at www.carmignac.com, or upon request to the Management Carmignac Portfolio refers to the sub-funds of Carmignac Portfolio SICAV, an investment company under Luxembourg law, conforming to the UCITS Directive. The French investment funds (fonds communs de placement or FCP) are common funds in contractual form conforming to the UCITS or AIFM Directive under French law.

  • In France, Luxembourg, Sweden: The risks, fees and ongoing charges are described in the KID (Key Information Document). The KID must be made available to the subscriber prior to subscription. The subscriber must read the KID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds present a risk of loss of capital. The Funds’ prospectus, KIDs, NAV and annual reports are available at www.carmignac.com, or upon request to the Management.

  • In the United Kingdom: the Funds’ respective prospectuses, KIIDs and annual reports are available at www.carmignac.co.uk, or upon request to the Management Company, or for the French Funds, at the offices of the Facilities Agent at BNP PARIBAS SECURITIES SERVICES, operating through its branch in London: 55 Moorgate, London EC2R. This document was prepared by Carmignac Gestion, Carmignac Gestion Luxembourg or Carmignac UK Ltd. FP Carmignac ICVC (the “Company”) is an Investment Company with variable capital incorporated in England and Wales under registered number 839620 and is authorised by the FCA with effect from 4 April 2019 and launched on 15 May 2019. FundRock Partners Limited is the Authorised Corporate Director (the “ACD”) of the Company and is authorised and regulated by the FCA. Registered Office: Hamilton Centre, Rodney Way, Chelmsford, Essex, CM1 3BY, UK; Registered in England and Wales with number 4162989. Carmignac Gestion Luxembourg SA has been appointed as the Investment Manager and distributor in respect of the Company. Carmignac UK Ltd (Registered in England and Wales with number 14162894) has been appointed as a sub-Investment Manager of the Company and is authorised and regulated by the Financial Conduct Authority with FRN:984288.

  • In Switzerland: the prospectus, KIDs and annual report are available at www.carmignac.ch, or through our representative in Switzerland, CACEIS (Switzerland), S.A., Route de Signy 35, CH-1260 Nyon. The paying agent is CACEIS Bank, Montrouge, Nyon Branch / Switzerland, Route de Signy 35, 1260 Nyon.

The Management Company can cease promotion in your country anytime. Investors have access to a summary of their rights in English on the following links: UK ; Switzerland ; France ; Luxembourg ; Sweden.