Carmignac Portfolio Emerging Patrimoine

• Emerging market assets rose during a month marked by renewed tariff tensions.• In the United States, solid macroeconomic data supported markets. The US Congress approved the Trump administration’s "One Big Beautiful Bill" budget plan. This ambitious tax reform is expected to push the annual deficit above 7% of GDP over the next decade.
• At the same time, the Federal Reserve kept interest rates unchanged at 4.25–4.50% for the fifth consecutive meeting, maintaining a wait-and-see stance and showing no urgency to resume rate cuts.
• Sovereign yields rose in July amid resilient growth on both sides of the Atlantic. The US 10-year yield rose by 15bps, while the German 10-year yield increased by 9bps.
• In emerging markets, several central banks continued their easing cycle in July, notably in Chile, Mexico, South Africa, and Indonesia. In contrast, Brazil and Colombia kept rates unchanged, adopting a cautious stance in light of external risks, particularly trade tensions.
• Emerging market equities posted strong gains, driven by China, Taiwan, and South Korea, while Brazil pulled back following a strong rally since the start of the year.
• Finally, the US dollar strengthened, recording its best monthly performance since 2022. In emerging markets, a reversal was observed: EM currencies depreciated against the US dollar but appreciated against the euro.

• During the month, the fund delivered a positive performance, although it underperformed its reference indicator.• The portfolio benefited from the strong performance of its credit selection, particularly its investments in emerging market debt denominated in hard currencies (Colombia, Côte d’Ivoire, Romania). However, this was slightly offset by the implementation of hedges designed to reduce exposure in an environment of tightening credit spreads.
• On the other hand, our local fixed income strategies detracted from performance. The fund was negatively impacted by its long positions in Hungarian and Brazilian rates, but gained from its exposure to Polish and Mexican debt.
• Although positive in absolute terms, our equity investments weighed on the fund’s relative performance. In particular, we were impacted by the weakness of holdings in Hynix, Eletrobras, Kotak, and Mercadolibre—among the worst performers in July despite being among the strongest contributors in the first half of the year.
• On the currency front, the fund benefited from the appreciation of EM currencies against the euro (MXN, INR), which contributed positively to performance.

• In an environment marked by uncertainty over tariffs, geopolitical tensions, and fiscal risks in certain countries, we expect central banks in both developed and emerging markets to maintain accommodative monetary policies. As a result, we are maintaining a moderate level of modified duration, at around 340 basis points.• Regarding local rates, we favour countries offering attractive real yields, such as Brazil, South Africa, and certain Eastern European countries like Poland and Hungary. We are also maintaining a long position in US rates, anticipating that the Fed will resume rate cuts in response to a weakening labour market.
• In credit, we continue to hold diversified exposure to emerging market external debt (Mexico, Colombia, Côte d’Ivoire, Romania), which should benefit from attractive yields and supportive idiosyncratic factors in a weak dollar environment.
• Over the month, we increased our positions in external debt while marginally reducing our exposure to Mexican and Indonesian local debt.
• On corporate credit side, while we continue to hold positions in energy and financial sector issuances, we remain cautious given relatively high valuations. We therefore maintain significant hedging through the iTraxx Xover index to protect the portfolio against spread widening.
• On the equity side, we made portfolio adjustments. We reduced our positions in Elite Material, VIPShop, Eletrobras, and Banorte, which had performed strongly since the start of the year.
• Conversely, we increased our position in DIDI, a Chinese mobility platform, and initiated a new position in CATL, the world leader in electric vehicle batteries, also active in autonomous vehicle technology.
• Finally, on the currency front, we increased our exposure to emerging market currencies, particularly Latin American currencies (CLP, BRL), as well as commodity-linked currencies such as the South African rand and the Indonesian rupiah.