III. Off the beaten path approach of Carmignac Investissement

Accounting for only 12.1% of the MSCI AC World Index¹, investing in Emerging Markets (EM) often means stepping off the beaten path. Drawing on his experience as an EM fund manager, Kristofer Barrett brings a deep understanding of these markets, enabling him to uncover opportunities that align perfectly with his investment philosophy: identifying profitable growth companies at the right price, in other words, not overpaying for growth.

To discover such opportunities, he favours a granular understanding of local dynamics rather than relying solely on top-down macroeconomic views or broad investment beliefs. Indeed, the EM universe encompasses a wide range of countries and companies, some of which no longer fit the traditional definition of “emerging.” These often display robust governance, attractive valuations, and volatility levels comparable to developed markets. It is among the EMs that we currently find some of the most compelling opportunities.

Today, three main themes stand out within our EM portfolio: the hidden engine of artificial intelligence (AI), governance stories and founder-led companies, and idiosyncratic growth opportunities.

While AI is often portrayed as a Silicon Valley phenomenon, its backbone lies firmly in Asia. The region anchors the entire AI value chain from TSMC’s near-monopoly in advanced chip manufacturing to innovators like Elite Materials, whose high-performance copper-clad laminates are indispensable to printed circuit board production. Far from being a peripheral player, Asia is the essential enabler of the AI revolution, a reality that investors cannot afford to overlook.

Within the technology sector, one of our key investment themes focuses on the bottlenecks that shape this ecosystem, many of which are concentrated in Asia. These same constraints create meaningful investment opportunities. When a supply chain reaches its limits, companies capable of easing or overcoming those limits often see outsized demand and pricing power. While some critical nodes, such as TSMC², are well-known and strategically critical, other companies are far less visible to investors, controlled by a handful of mid-sized firms producing key components like baseboard management controllers (i.e. Aspeed Technology), copper-clad laminates (CCLs) or power supply (i.e. Lite-On). These businesses often combine underappreciated profitability with robust balance sheets, enabling them to capture a compelling growth trajectory and sustained earnings expansion.

For investors, we believe that Asian companies offer differentiated and less-crowded exposure to the structural growth of AI.

Governance is a key pillar of Kristofer Barrett’s investment process. One important aspect of governance is capital allocation: the way a company decides to deploy its financial resources (cash, debt capacity, and equity) across projects, investments and operations. Founder-led businesses often demonstrate stronger alignment between management and shareholders, leading to more disciplined and efficient capital allocation decisions over the long term. In Asia, regions such as Taiwan feature a high concentration of family- or founder-led companies, providing a fertile ground for investment ideas that align with this pillar.

Some examples of this include:

• Tong Yang² (Taiwan): The company is one of the world’s largest manufacturers of automotive plastic components, particularly exterior body panels and bumpers. The company benefits from a well-established global footprint, strong financial performance, and a strategic expansion into the U.S. aftermarket — positioning it to capture rising demand for cost-effective, high-quality replacement parts. With the founding family retaining over 50% ownership, Tong Yang maintains a long-term strategic focus and disciplined capital allocation consistent with founder-led governance principles.

• Poya² (Taiwan): A leading retail chain specializing in lifestyle goods (mostly cosmetics and personal care). Founded and still led by entrepreneur Chien Tsao Chen, the company embodies a strong founder-led culture focused on accessible pricing, trend-aware merchandising, and continuous store expansion. This hands-on leadership has shaped Poya’s customer-centric approach and steady growth into one of Taiwan’s most trusted everyday retail brands.

Beyond structural trends, certain EM companies stand out through unique growth trajectories, driven by their business model, governance, or competitive positioning.

A few investment examples include:

• Allegro² (Poland): The company is the leading e-commerce platform in Poland, serving as the primary online marketplace for Polish consumers. Roughly one-third of the population shops on Allegro, which commands over 30% of the country’s online market share and approximately 5% of the total retail market³. Its strong brand recognition, efficient logistics, and scalable business model position it to capture continued growth in Poland’s expanding e-commerce sector. The company generates robust free cash flow and supports shareholder value through share buybacks.

• Getac² (Taiwan): The company is a global leader in rugged computing solutions. The company designs, manufactures, and markets fully rugged laptops, tablets, and in-vehicle systems engineered for demanding environments such as public safety, defense, utilities, logistics, and industrial sectors. Getac delivers reliable, high-performance products that enable critical operations under extreme conditions.

In Carmignac Investissement, Kristofer actively seek companies with sustainable growth potential, and compelling valuations.

Countries classified as EMs, though often far more advanced, are still underrepresented in global portfolios, creating fertile ground for active managers. These markets now represent 26.9% of our Fund⁴.

Here’s how this approach is reflected in the portfolio construction:

• Almost one quarter of our holdings — 20 companies in total — lie outside the MSCI ACWI Index, with 14 of them located in EMs⁴.
• Our active share stands at 79%, underscoring our determination to go beyond market consensus.

When the convictions are strong, even in EMs, the fund manager is not afraid to express them through meaningful positions:

• TSMC (9.6% vs. 1.2% in the reference indicator MSCI ACWI Index⁴) – a key player in advanced semiconductors;
• SK Hynix (4.4% vs. 0.1%)⁴ – South Korea’s leading memory chip manufacturer.

These allocations reflect Kristofer’s philosophy: daring to step off the beaten path to capture growth where it is truly being built.