Carmignac Portfolio Patrimoine Europe

Global markets posted strong gains in USD terms, with both equities and bonds advancing. However, the weaker dollar against the euro translated into negative performance in euro terms.

US labour market data signalled a slowdown, prompting Fed Chair Jerome Powell at Jackson Hole to hint at possible rate cuts. Markets are now pricing in a 25 bps reduction in September.

Political tensions in the US intensified as President Trump dismissed the head of the BLS and moved to oust Fed Governor Lisa Cook, raising concerns about central bank independence.

The US yield curve steepened, with long-end yields climbing on worriesabout Fed independence.

In Europe, political risk re-emerged as the French Prime Minister faced a no-confidence vote. France remains a fiscal outlier within the Eurozone, amplifying investor unease.

Eurozone yields moved higher, supported by improved growth sentiment, while July inflation data was broadly in line with expectations.

Global equities hit new highs, buoyed by reduced tariff-related noise following the 1 August deadline, stronger US GDP growth, and rising expectations of Fed rate cuts in September.

The AI trade maintained strong momentum, with Nvidia reaching new all-time highs after robust results.

Trade tensions lingered as the US raised tariffs, including a 50% levy on Russian oil imports via India. Commodity markets diverged: oil and gas prices declined, while gold rallied.

The fund delivered a positive performance over the month but remained below its reference indicator.

Stock selection continued to weigh on relative performance, particularly due to the underperformance of Alcon, Argenx, and Schneider Electric.

Year-to-date underperformance is mainly explained by the relative weakness of our long-term convictions, affected by the decline of the quality style in Europe.

On the fixed income side, we offset the rise in European yields thanks to reduced bond sensitivity, our inflation-linked positions, and our credit exposure.

Our diversification tools also contributed, particularly through our exposure to gold, silver, and currencies.

European growth is expected to remain weak in the near term, with a cyclical rebound likely only in late 2025 / 2026, supported by easing policy uncertainty, improving credit flows, and German fiscal stimulus.

Disinflation should continue into year-end as base effects fade and wage pressures ease.

Market expectations are no longer dovish; the yield curve is already pricing in hikes by late 2026. The asymmetry lies in the ECB’s stance: it will cut rates if necessary. Preference remains cautious on the long end.

Inflation-linked strategies look attractive, with real rates at decade highs.

We remain constructive on equities, with high exposure supported by the current environment.

Quality names offer attractive valuations, with opportunities in companies tied to long-term themes such as electrification and reindustrialisation. Allocation to banks has been reinforced, underpinned by strong fundamentals.

Credit spreads appear expensive and also provide a good hedge against equities, but carry remains appealing and dispersion offers alpha potential.