Skip to mainSkip to footer

Carmignac Portfolio Grande Europe: Letter from the Fund Manager

[Management Team] [Author] Denham Mark
Author(s)
Mark DENHAM
Published on
January 20, 2025
Read time
4 minute(s) read
-3.20%
Performance of the fund (A EUR Acc share class) in the 4th quarter of 2024 vs -2.63% for its reference indicator1 (Stoxx 600, Reinvested net dividends, EUR).
+11.27%
Performance of the fund (A EUR Acc share class) in 2024 vs +8.78% for its reference indicator.
+99.68%
Performance of the fund (A EUR Acc share class) since Mark Denham took over (17/11/2016) vs +84.37% for its reference indicator.

During the fourth quarter of 2024, Carmignac Portfolio Grande Europe (A share class) produced a negative return of -3.20%, compared to the reference indicator which was down -2.63%. Nevertheless, the fund performance over the year was +11.27%, versus +8.78% for the reference indicator.

Market Environment During the Period

The year started off in in the same vein as markets finished in 2023, led by optimism for interest rate cuts by central banks on both sides of the Atlantic. What was very encouraging was that this momentum persisted even when it became clear expectations for rate cuts were too high, owing to strength in the US economy and a slower decline in inflation.

In March we saw a broadening out of performance with cyclical sectors like banks and autos picking up steam. We saw a distinct change in the second quarter, caused by stronger than expected economic data and inflation falling slower than hoped, although as the period progressed this situation eased allowing some central banks, notably including the European Central Bank (ECB), to start cutting rates.

Sector rotations started to be seen, and volatility picked up during the third quarter with a reversal towards cyclical sectors.

The year ended on a poor final quarter for European stocks. The backdrop continued to be one with modest growth in profits, with only 3% growth expected for the full year. The prospect of, and reaction to, a Trump presidency and the attendant risk of tariff rises led to European stocks sharply lagging the rally that took place in the US. Also, consumer stocks exposed to China, saw fading excitement over the scale of domestic stimulus there. The macroeconomic picture was little better with manufacturing indicators firmly in contractionary territory, protracted conflict in the Middle East, political disruption, and budgetary uncertainty in France with corporate tax surcharges announced, and bond yields gradually increasing. The ECBs ongoing commitment to cutting interest rates was at least one positive for the region.

How did we fare in this context?

The fund's performance over the year can be divided into two distinct phases. The first half of the year saw our fund supported by the Technology and Healthcare sectors. Yet again, Novo Nordisk was the strongest stock contributor, then. The consumer sectors were weak over the first half of the year driven by weakening economic growth and in particular consumer spending. The luxury good sector in particular suffered over these months. With the pullback seen on Hermes in January we saw an opportunity for long-term investors like us to start a position in a company whose products are at the apex of desirability, exclusivity and therefore also pricing power. With their full year results the company confirmed this profile with double digit growth and guided for further price increases of c8% underpinning our forecasts of 13% sales growth in 2024.

The second half of the year, driven by mixed company reporting and global markets falling led by tech names that were strong in the first half of 2024, was somewhat more difficult to navigate. The recovery was led by economically sensitive cyclical names anticipating future recovery, following the confirmed Federal Reserve (Fed) rate cut in September.

As the market leadership was taken up by cyclical sectors, previously strong areas of the market, notably Healthcare and Technology lagged. This was detrimental to our fund as we typically have large long-term exposures to these sectors. Conversely for the long term we avoid sectors such as Financials which were strong.

Several of our consumer names contributing negatively to our fund performance over the period, with L’Oreal the worst among them. Within the healthcare and Technology sectors, although our overweight was not supportive, our stock selection was a positive contributor.

In the third quarter, we reduced our weight to ASML significantly from c.8% to c.3%. We were concerned stocks in the semiconductor sector had done well and looked technically extended, and that they were increasingly correlated to US names like Nvidia where expectations were almost impossible to surpass in the short run. It transpires we were right as the stock sold off post Q2 numbers.

In the fourth quarter, we were increasingly cautious ahead of a late stage clinical trial read out of Novo Nordisk’s next generation product cagri-sema where expectations were already extremely high for success. Consequently, we had reduced the size of our holding from as much as 9% at the start of the year to about 5% into the event. As it turned out while the drug delivered about 23% weight loss after a year, this was less than hoped and the stock fell dramatically by about 20%. After this drop though, which we see as an over-reaction, we have started to re-increase our exposure. We believe the company can grow profits of the order 20-25% p.a. in the medium term now that drug supply bottlenecks have been alleviated, enabling strong demand to be satisfied.

Over the second half of the year, we added two names in the healthcare sector. Firstly, BioNTech, within our biotech sleeve. The company had been a beneficiary of Covid in 2020. As demand for vaccines has dwindled and the hype has come out of the name, the share fell to c.90 USD. This was our opportunity to start a holding. We like the fact that the company has 32 projects in development for a range of illnesses. Their previous vaccine success means they can fund their projects internally using the large cash reserves they have built up from Covid vaccines. Secondly, Galderma. They are a specialist in dermatological products with health or cosmetic benefits, ranging from prescribed drugs for skin illnesses such as eczema or rashes, to aesthetic products used in cosmetic applications. The segments the company operates in are relatively fast growing and they are outgrowing this owing to innovation and strong commercial execution leading to high single digit organic growth. In addition, recent drug approvals offer exciting upside to medium term forecasts.

What is our outlook for the coming months?

We maintain our focus on stocks and sectors with strong visibility on sales and profits. We have an investment horizon of 5 years, and we stick to our process of focusing on profitable companies with high returns on capital, reinvesting for growth. We believe these companies will continue to deliver the best long-term returns for investors. However, our tactical view is to position defensively. This is based on fact that ongoing earning downgrades will likely see market falls. Recent economic data supports that view, notwithstanding recently stickier inflation (at an absolute low level) and employment strength, and despite euphoria regarding Trump 2.0. Falling yields as inflationary pressures ease should start to be supportive. Our view remains that as growth slows, inflation will continue to subside allowing rates to drift lower again, as they have started to do. Hence, higher visibility should ultimately be rewarded, this is why we want to contain any net cyclicality/beta/momentum/illiquidity, which is reflected in our trading since the start of the year.

1Source: Carmignac, Bloomberg as of 31/12/2024.

Carmignac Portfolio Grande Europe

A high conviction, sustainable European equity strategy
Discover the fund page

Carmignac Portfolio Grande Europe A EUR Acc

ISIN: LU0099161993
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: LU0099161993
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
1,82 % 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
0,58 % 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: LU0099161993
Carmignac Portfolio Grande Europe+8,5−0,9+11,3+14,8−21,1+21,7+14,5+34,8−9,6+10,4
Reference Indicator+12,0+19,4+8,8+15,8−10,6+24,9−2,0+26,8−10,8+10,6
Carmignac Portfolio Grande Europe+10,1 %+1,9 %+7,9 %
Reference Indicator+17,2 %+9,1 %+9,4 %

Source: Carmignac at Oct 30, 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: MSCI Europe 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.

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/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.

  • In Switzerland: the prospectus, KIDs and annual report are available at www.carmignac.com/en-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.

  • 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.

The Management Company can cease promotion in your country anytime. Investors have access to a summary of their rights at section 5 entitled "summary of investor rights" on the following links: UK ; Switzerland ; France ; Luxembourg ; Sweden. Belgium (French) ; Belgium (Dutch)

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.