Carmignac Portfolio Grandchildren: 2022 end of summer update

Published on
September 16, 2022
Read time
2 minute(s) read

YTD Performance Review

The skyrocketing inflation, exacerbated by the war in Ukraine, has led Central banks in developed countries to aggressively tighten their monetary policy. The end of the multi-year ultra-accommodating era has pushed interest rates higher, leading to a significant contraction in equity markets’ valuations.

After years of outperformance, long-duration stocks which are more sensitive to rising rates were the most impacted by this environment, chief among them companies in the technology sector, which valuation sometimes relied more on expected growth rather current or historical profitability.

The broad-based market drawdown led us to record a negative performance since the beginning of the year. Carmignac Portfolio Grandchildren A EUR Acc lost -19.42%, underperforming its reference indicator1 (-7.02%).

  • The bulk of the underperformance comes from our overweight of the IT, healthcare and Industrials sectors, mainly via Nvidia, Masimo and Kingspan.
  • Our non-exposure to the energy sector, only one recording a YTD positive performance, hurt the strategy on a relative basis.

Stock picking in some cyclical/defensive sectors (Palo Alto, Compass, Novo Nordisk

Notable portfolio moves – last few months

Throughout the year, we have continued to tilt the portfolio more defensively, by increasing the size of positions in the healthcare and staple sectors and reducing the sizing of our most cyclical positions.

NEW POSITIONS / REINFORCEMENT

  • Strengthening of high-conviction names like Microsoft, Thermo Fisher, Novo Nordisk
  • Increase of defensiveness through the strengthening of staple names Colgate-Palmolive and Procter & Gamble, technology names Alphabet and ServiceNow, as well as healthcare names Align Technology, Resmed and Stryker

POSITIONS SOLD / REDUCED

  • Profit taking on: Compass, Elevance Health, LVMH
  • Reduction of: Lululemon, Sensata Technologies, Transunion, Zoetis
  • We sold names which we believe should not benefit from the post pandemic environment, such as Electric Arts, Paypal and Walt Disney.

Outlook

  • The Fed and the ECB look committed to reign inflation at the expense of growth.
    While inflation is thus likely to stabilize/moderate once Central banks accomplish the bulk of the tightening, recession risks are increasing, especially in Europe, where increasing gas prices are weighing on companies and consumers.
  • Consequently, we continue to optimize the portfolio for the next leg up in equity markets, by both reducing cyclicality and increasing defensiveness.
    We sold names which we believe would not benefit from the post pandemic environment, such as Electric Arts, PayPal and Walt Disney.
  • Our focus remains on identifying and owning profitable companies with high return on capital. These companies, we believe, are in a good position to deliver results over a five year or longer time horizon.
  • Among core convictions, we note healthcare names Novo Nordisk and Eli Lilly. Within the diabetes segment and the nascent obesity opportunity, these companies enjoy a healthy competition which pushes both players to innovate their products and offering. A dynamic which finds fertile ground as there is plenty of room for both companies in a wide addressable market.

Carmignac Portfolio Grandchildren

A global, high-conviction equity fund for long-term investorsAccess the fund page

Performance

ISIN: LU1966631001
Carmignac Portfolio Grandchildren15.520.328.4-24.223.021.9-7.5
Reference Indicator15.56.331.1-12.819.626.6-5.9
Carmignac Portfolio Grandchildren+ 6.0 %+ 12.8 %+ 11.4 %
Reference Indicator+ 8.6 %+ 16.5 %+ 12.6 %

Source: Carmignac at Mar 31, 2025.
​Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor).

Reference Indicator: MSCI World NR index

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. **The Sustainable Finance Disclosure Regulation (SFDR) 2019/2088 is a European regulation that requires asset managers to classify their funds as either 'Article 8' funds, which promote environmental and social characteristics, 'Article 9' funds, which make sustainable investments with measurable objectives, or 'Article 6' funds, which do not necessarily have a sustainability objective. For more information please refer to https://eur-lex.europa.eu/eli/reg/2019/2088/oj.

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.

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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.

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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.

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  • 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.

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