Carmignac Sécurité: Letter from the Fund Managers - Q2 2025
During the second quarter, Carmignac Sécurité posted a performance of +0.82%, compared with +0.86% for its reference indicator, bringing its performance since the beginning of the year to +1.56%, in line with its reference indicator, which posted the same change (+1.56%).
Market review and portfolio allocation
The quarter was heavily influenced by the trade war initiated by Donald Trump and his successive U-turns: first the sudden imposition of record tariffs, then their temporary suspension, followed by renewed threats of a 50% tariff on European imports. These unilateral decisions caused sharp fluctuations in the markets, with periods of decline alternating with renewed risk appetite.
At the same time, US economic statistics deteriorated, with negative growth published for Q1 (-0.5%) and a slowdown in household consumption. However, employment remained solid, while inflation, although under control, remained above the Federal Reserve's (Fed) target. In response, the Fed maintained a cautious tone, highlighting the increased risks to employment and prices.
In Europe, the economic rebound was delayed by uncertainties relating to tariffs, but we expect such a delay to be temporary. Germany confirmed and voted through its massive infrastructure and defence investment programme, which is unprecedented since reunification. The European Central Bank (ECB) therefore continued its cycle of rate cuts, lowering its key rate to 2% in June, while remaining attentive to inflationary signals linked to rising energy prices, following tensions in the Middle East, and to the fiscal stimulus planned in Germany over the next few years.
Faced with these global uncertainties, fixed income markets were volatile. The US yield curve steepened sharply, with long-term rates coming under particular pressure and reaching levels not seen since 2007, especially for 30-year bonds, amid fears of budgetary slippage, while short-term rates anticipated further rate cuts in a slowing economy.
In the eurozone, the curve also steepened, with short-term rates falling in line with the ECB's rate cuts, while long-term rates rose slightly at the end of the quarter, mainly due to the German budget vote.
The credit market experienced significant volatility, as illustrated by the fluctuations in the iTraxx Xover index, whose spreads widened by nearly 100 bps following ‘Liberation Day’ before tightening significantly from mid-April onwards, in the wake of easing trade tensions.
Performance Review
The Fund’s performance was driven by three key pillars: a robust carry level, selective credit exposure, and proactive risk management.
The yield to maturity consistently hovered between 3.6% and 3.8%, serving as the primary contributor to returns. Duration was actively managed within a range of 1.3 to 2.0, while maintaining a steepening strategy designed to capitalize on declining short-term rates and shield against rising long-term rates—pressured by developed countries’ ongoing challenges in reducing budget deficits.
During the quarter, the Fund’s allocation to credit was increased, reaching 77% by the end of June. This exposure remains focused on short-dated bonds, high-quality issuers that provide attractive carry with lower volatility. Concurrently, the allocation to money market instruments was gradually reduced from 25% to 19%, favouring corporate bonds with maturities under five years to capture enhanced yields amid a steepening credit curve.
Finally, protective measures through iTraxx Xover CDS (approximately 6% at quarter-end) and options on 10-year German bunds were maintained or strengthened in response to narrowing spreads and sharply declining German rates.
What is our outlook for the coming months?
The third quarter began amid continued uncertainty, marked by the trade war, geopolitical tensions and the prospect of divergent monetary policies between the Fed and the ECB. In this environment, Carmignac Sécurité adopted a balanced approach based on:
- increased selectivity in credit,
- flexible and defensive duration,
- dynamic hedge management,
- and an attractive carry strategy, designed to enable the fund to weather periods of volatility while continuing to offer an attractive yield.
Carmignac Sécurité
Carmignac Sécurité AW EUR Acc
- Recommended minimum investment horizon
- 2 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
Fees
- Entry costs
- 1,00 % 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
- 1,11 % of the value of your investment per year. This estimate is based on actual costs over the past year.
- Performance fees
- There is no performance fee for this product.
- Transaction Cost
- 0,11 % 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
| Carmignac Sécurité | +1,6 | +5,3 | +4,1 | −4,8 | +0,2 | +2,0 | +3,6 | −3,0 | +0,0 | +2,1 |
| Reference Indicator | +1,6 | +3,2 | +3,4 | −4,8 | −0,7 | −0,2 | +0,1 | −0,3 | −0,4 | +0,3 |
| Carmignac Sécurité | +4,6 % | +1,9 % | +1,1 % |
| Reference Indicator | +1,8 % | +0,5 % | +0,2 % |
Source: Carmignac at Jun 30, 2025.
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: ICE BofA 1-3 Year All Euro Government index