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Carmignac Portfolio Grandchildren: Letter from the Fund Managers

Author(s)
Mark DENHAM,Obe EJIKEME
Published on
16 April 2025
-7.50%
Performance of the Fund in Q1 2025 (A EUR Share class).
-5.86%
Performance of its reference indicator1 in Q1 2025.
+12.82%
Annualized performance of the Fund over 5 years vs +16.48% for its reference indicator.

Carmignac Portfolio Grandchildren A EUR Acc delivered a performance of -7.50% in the first quarter of 2025, underperforming its reference indicator, which also declined by -5.86%.

Market environment during the period

The macro environment in Q1 2025 was defined by heightened policy uncertainty, particularly in the United States, where aggressive new tariffs and protectionist trade measures under the new administration triggered volatility and a sharp shift in investor sentiment. While broad economic indicators remained stable, the threat of a trade war and geopolitical tensions led to a marked deterioration in consumer and business confidence, especially in the US. As a result, US equity markets experienced their worst quarter since 2022, with the S&P 500 falling -9.26% (in EUR2) and the tech-heavy Nasdaq 100 down over 11.13% (in EUR2), driven largely by steep declines in the “Magnificent Seven” mega-cap stocks. Following the DeepSeek news in January, there was a notable rotation out of crowded US technology and related sectors into other regions, particularly Europe.

European equities outperformed, supported by fiscal stimulus, structural reforms—most notably Germany’s increased infrastructure and defence spending—and a weaker US dollar. Domestic sectors, particularly banks and defence companies, were the primary beneficiaries of these supportive trends. However, the tariff announcements at the end of March unsettled markets and triggered an early shift toward defensive positioning, reflecting heightened macroeconomic uncertainty and renewed concerns about global growth.

How did we fare in this context?

During the first quarter of 2025, the fund declined and underperformed its reference indicator. The initial market rotation out of US technology stocks negatively impacted absolute returns. While the fund maintains positions in leading US technology companies such as Microsoft, Nvidia, and Amazon, we had proactively reduced our exposure to this sector towards the end of 2024. This adjustment helped mitigate some of the downside but did not fully offset the broader sector weakness.

In Europe, our allocation remained aligned with our investment process, which emphasizes high-quality market leaders. However, we had no exposure to the European sectors that led performance until March 2025—specifically defence (excluded for sustainability reasons), Banks, and Insurance (excluded due to our quality criteria). This under-exposure to the top-performing sectors was the primary driver of our relative underperformance year-to-date.

Our healthcare holdings also detracted from performance. In a challenging market environment, several of our healthcare companies underperformed. While pharmaceutical names such as Vertex delivered positive results, other high-quality holdings in the sector—including Thermo Fisher, Intuitive Surgical, and Align Technology—lagged. However, the sector remains an area of uncertainty. Although there were promises that tariffs would be announced "soon," it has now been clarified that this will not occur until the drug pricing hearing concludes. Consequently, Novo Nordisk continued to decline. Despite reducing our position to below 3%, it remained a drag on the fund’s performance. The company’s 2025 revenue growth guidance of 16–24% (with the midpoint marking the slowest growth in three years) disappointed investors, while the prospect of potential US tariffs on European pharmaceutical imports raised further concerns about cost pressures.

On a more positive note, our holdings in the financial sector —particularly ICE and Mastercard, were among the main contributors to performance. Additionally, the consumer staples sector began to recover toward the end of the quarter, as the announcement of tariffs pressured broader markets but benefited select defensive names.

Outlook & positioning

In the coming months, a crucial consideration is whether tariffs will be implemented following the "90 days pause" and the extent of such tariffs. This ongoing uncertainty is influencing market sentiment. As a result of the recent sharp market correction, numerous companies have reverted to their five-year low valuations, creating attractive opportunities for us as long-term investors to increase our positions.

While our portfolio has minimal direct exposure to companies significantly impacted by tariffs, we acknowledge that the broader economic environment remains challenging. The negative sentiment surrounding global trade may particularly affect cyclical sectors. Consequently, we believe that high-quality, secular growth companies with superior visibility on sales and profits will perform well in this uncertain environment. These companies are likely to provide stability and growth potential, making them ideal candidates for our portfolio.

During the quarter, we took advantage of what we believe to be excessive weakness in selected technology holdings, notably Nvidia and Amazon, to materially increase our positions. We also added to our exposure in the electrical equipment sector through Prysmian on share price weakness. In healthcare, our new analyst initiated coverage on US drug distributors Cencora and McKesson, both of which scored well in our investment process. We have started to build small positions in these names. Additionally, we established a modest position in Unilever. These new investments were funded primarily through profit-taking in Mastercard and S&P Global within the financial sector.

Our macro-overlay framework continues to advocate for a defensive stance in equity markets, favouring sectors like consumer staples and healthcare – that tend to weather economic storms better than most. However, we remain agile and are prepared to tactically increase our biggest conviction positions when valuations become attractive, as we have done successfully during previous periods of market volatility.

1Reference indicator: MSCI WORLD (USD, net dividends reinvested). Past performance is no guarantee of future results. They are net of fees (excluding any entry fees applied by the distributor).

2Source: Bloomberg, data as of 31/03/2025.

Carmignac Portfolio Grandchildren

An intergenerational Fund focused on quality, sustainable companies
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Carmignac Portfolio Grandchildren A EUR Acc

ISIN: LU1966631001
Recommended minimum investment horizon
5 years
Risk indicator*
4/7
SFDR - Fund Classification**
Article 9

*Risk Scale from the KID (Key Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time. **Sustainable Finance Disclosure Regulation (SFDR) 2019/2088. The SFDR classification of the Funds may change over time.

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.
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 presents a risk of loss of capital. Please refer to the Fund’s prospectus to view the exhaustive list of risks.

Fees

ISIN: LU1966631001
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
1.71% of the value of your investment per year. This estimate is based on actual costs over the past year.
Performance fees
20.00% when the share class overperforms the Reference indicator during the performance period. It will be payable also in case the share class has overperformed the reference indicator but had a negative performance. Underperformance is clawed back for 5 years. 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
0.30% 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.

Performance

ISIN: LU1966631001
Carmignac Portfolio Grandchildren−7.5+21.9+23.0−24.2+28.4+20.3+15.5
Reference Indicator−5.9+26.6+19.6−12.8+31.1+6.3+15.5
Carmignac Portfolio Grandchildren+6.0%+12.8%+11.4%
Reference Indicator+8.6%+16.5%+12.6%

Source: Carmignac at 31 Mar 2025.
Date of 1st NAV : 31/05/2019.
Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The Fund presents a risk of loss of capital.
The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency-hedged.

Reference Indicator: MSCI World NR index

Share

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.

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The Funds’ prospectus, KIDs, NAVs and annual reports are available at www.carmignac.com/en, 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 the United Kingdom: the Funds’ respective prospectuses, KIIDs and annual reports are available at www.carmignac.com/en-gb, or upon request to the Management Company, or for the French Funds, at the offices of the acilities Agent, Carmignac UK Ltd, 2 Carlton House Terrace, London, SW1Y 5AF. 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.

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  • In Belgium: This document is intended for professional clients. This content has not been validated by FSMA. The decision to invest in the promoted fund should take into account all its characteristics or objectives as described in its prospectus. This communication is published by Carmignac Gestion S.A., a portfolio management company approved by the Autorité des Marchés Financiers (AMF) in France, and its Luxembourg subsidiary Carmignac Gestion Luxembourg, S.A., an investment fund management company approved by the Commission de Surveillance du Secteur Financier (CSSF). “Carmignac” is a registered trademark. “Investing in your Interest” is a slogan associated with the Carmignac trademark. This document does not constitute advice on any investment or arbitrage of transferable securities or any other asset management or investment product or service. The information and opinions contained in this document do not take into account investors’ specific individual circumstances and must never be interpreted as legal, tax or investment advice. The information contained in this document may be partial and could be changed without notice. This document may not be reproduced in whole or in part without prior authorisation. The risks and fees are described in the KID (Key Information Document). The prospectus, KID, the net asset-values and the latest (semi-) annual management report may be obtained, free of charge, in French or in Dutch, from the management company (tel. +352 46 70 60 1) or by consulting its website or www.fundinfo.com. These materials may also be obtained from Caceis Belgium S.A., the financial service provider in Belgium, at the following address: avenue du port, 86c b320, B-1000 Brussels. The Fund (fonds commun de placement or FCP) is a common fund in contractual form conforming to the UCITS Directive under French law. Access to the Fund may be subject to restrictions regarding certain persons or countries. 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. In case of subscription to a fund subject to Article 19bis of the Belgian Income Tax Code (CIR92), the investor will have to pay, upon redemption of his or her shares, a withholding tax of 30% on the income (in the form of interest, or capital gains or losses) derived from the return on assets invested in debt claims. Distributions are subject to withholding tax of 30% without income distinction. In case of subscription in a French investment fund (fonds commun de placement or FCP), you must declare on tax form, each year, the share of the dividends (and interest, if applicable) received by the Fund. Any complaint may be referred to complaints@carmignac.com or CARMIGNAC GESTION - Compliance and Internal Controls - 24 place Vendôme Paris France or on the website www.ombudsfin.be.

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For Carmignac Portfolio Long-Short European Equities: Carmignac Gestion Luxembourg SA in its capacity as the Management Company for Carmignac Portfolio, has delegated the investment management of this Sub-Fund to White Creek Capital LLP (Registered in England and Wales with number OCC447169) from 2nd May 2024. White Creek Capital LLP is authorised and regulated by the Financial Conduct Authority with FRN : 998349.

Carmignac Private Evergreen refers to the Private Evergreen sub-fund of the SICAV Carmignac S.A. SICAV – PART II UCI, registered with the Luxembourg RCS under number B285278.