Carmignac Absolute Return Europe: Letter from the Fund Managers - Q1 2026

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April 14, 2026

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3 minute(s) read

Dear investors,

Over the first quarter of 2026, Carmignac Absolute Return Europe (A EUR Acc share class) realized a negative performance of -1.72%.

Market environment

The first quarter of 2026 was characterised by elevated volatility and pronounced sector rotations, driven primarily by macroeconomic developments and top-down thematic shifts.

European equities began the year on a strong footing, extending the momentum from the fourth quarter, supported by resilient economic data and continued diversification flows from global investors. Markets initially looked through geopolitical tensions, maintaining a constructive tone through the early part of the quarter.

However, sentiment deteriorated sharply in March as tensions between the US/Israel and Iran escalated, culminating in the closure of the Strait of Hormuz. This marked a turning point in market dynamics, ending an eight-month period of positive returns in Europe. Oil prices surged, recording their largest one-day increase since 2022, triggering a broad repricing of risk assets. Rising inflation expectations pushed bond yields higher and led to a temporary shift in market expectations from rate cuts to potential rate hikes. At the same time, higher energy prices weighed on growth expectations, acting as a negative shock to consumers, corporate margins and industrial activity. As a result, European equities sold off sharply, with the Euro Stoxx declining by 8% in March and leaving the market down 1.53% for the quarter.

Sector dynamics were a key feature throughout the period. January saw an acceleration in the sell-off of perceived “AI losers,” including software, IT services and data-driven business models. This trend persisted as investors reassessed terminal valuations in light of new AI developments from players such as Anthropic and OpenAI, which are viewed as potentially disruptive. In contrast, sectors perceived as beneficiaries, or relatively insulated from AI disruption, outperformed.

Within Europe, Energy was the standout performer, delivering strong returns, supported by rising oil prices. Other outperforming sectors included Telecoms, Utilities, Basic Resources and Chemicals. Conversely, more economically sensitive areas such as Media, Consumer Products, Autos, Travel and Retail underperformed. Precious metals also experienced significant volatility, with strong gains early in the quarter followed by a reversal.

Overall, while index-level performance remained relatively contained, underlying dispersion was significant, creating a more complex and opportunity-rich environment for active management.

Performance review

After a strong start to the year, market conditions became more challenging as risk premia increased and volatility picked up. In response, we proactively reduced exposure in line with our disciplined risk management framework to preserve capital. Gross exposure was reduced from the mid-120% range to as low as 88%, while net exposure was lowered from the mid-teens to approximately flat. We tactically reduced exposure to Technology, Financials and Industrials, where we anticipated greater vulnerability to profit-taking and a repricing of growth expectations.

Despite positive contributions from short positions, as well as from futures and options hedging, the Fund delivered a negative return for the quarter.

At the sector level, positive contributions came from Technology, Industrials, Communications and Utilities. The main detractors were Financials and Consumer Discretionary, while Healthcare also weighed on performance despite its typically defensive characteristics.

On a stock level, the main contributors were:


Long position in Siemens Energy	Earnings and order book materially ahead of expectations
Long position in ASM International	Benefitted from increased capex linked to AI applications
Long position in Vestas	Stronger-than-expected turbine orders
Long position in Samsung	Strong memory volumes and supplier to Nvidia

On a stock level, the main detractors were:


Long position in Prosus	Uncertainty regarding the scale of investment plans
Long position in Fresenius	Profit-taking following prior strength
Long position in Banca Monte dei Paschi	Leadership disruption following CEO replacement
Long position in Noba Bank	Concerns around consumer finance exposure
Long position in Deutsche Post	Underperformed despite a more constructive broker backdrop

Outlook

Markets are likely to remain range-bound in the near term and highly sensitive to developments in the Gulf. Investors are currently balancing still-resilient economic activity against rising risks to growth and renewed inflationary pressures, resulting in a more cautious and reactive market environment.

The upcoming Q1 earnings season will be a key catalyst, with outcomes expected to diverge significantly across sectors and companies. Management teams are also likely to adopt a more cautious tone on forward guidance given the current geopolitical backdrop.

While a potential de-escalation could provide upside, overall visibility remains limited. In this context, we maintain a cautious yet opportunistic stance.

Our positioning continues to favour medium-term beneficiaries of the current environment, including Construction, Industrials, Banks, Renewables and Electrification, as well as selective exposure to Defence within ESG constraints, while remaining underweight Consumer sectors.

Source: Carmignac, Bloomberg. Data as of 31/03/2026.

Carmignac Absolute Return Europe A EUR Acc

ISIN: FR0010149179

Recommended minimum investment horizon: 3 years

Risk indicator*: 2/7

SFDR - Fund Classification**: Article 8

*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

Risk associated with the Long/Short Strategy: This risk is linked to long and/or short positions designed to adjust net market exposure. The Fund may suffer high losses if its long and short positions undergo simultaneous unfavourable development in opposite directions.

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.

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. Please refer to the Fund’s prospectus to view the exhaustive list of risks.

Fees

ISIN: FR0010149179

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: 2,15 % 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 if the performance is positive and the net asset value exceeds the high-water mark. 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: 1,05 % 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: FR0010149179


Carmignac Absolute Return Europe	−1,7	−0,6	+3,6	+0,0	−6,4	+12,6	+5,2	−1,3	+4,4	+14,6


Carmignac Absolute Return Europe	+1,4 %	+1,1 %	+3,6 %

Source: Carmignac at Mar 31, 2026.
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: -

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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.

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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/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.