Glossary

An investment management approach where a manager aims to beat the market through research, analysis and their own judgement. See also Passive management.

Portfolio active share measures how different from the reference indicator the portfolio is. The closer the active share is to 100%, the less identical stocks a portfolio has compared to its reference indicator, thus the more active the portfolio manager is compared to the market.

Represents the absolute value of the difference between the weight of a holding in the manager’s portfolio and the same holding in the benchmark index.

Alpha measures the performance of a portfolio compared to its reference indicator. Negative alpha means the fund performed less well than its reference indicator (e.g. if the indicator increased by 10% in one year and the fund increased by only 6%, its alpha is -4). Positive alpha means the fund performed better than its reference indicator (e.g. if the indicator increased by 6% in one year and the fund increased by 10%, its alpha is 4).

Sustainable Finance Disclosure Regulation (SFDR) 2019/2088. EU Act that requires asset managers to classify funds into categories, “Article 8” funds promote environmental and social characteristics, “Article 9” funds have sustainable investments as a measurable objective. In addition to not promoting environmental or social characteristics, "Article 6" funds have no sustainable objectives. For more information, please refer to https://eur-lex.europa.eu/eli/reg/2019/2088/oj .

Sustainable Finance Disclosure Regulation (SFDR) 2019/2088. EU Act that requires asset managers to classify funds into categories, “Article 8” funds promote environmental and social characteristics, “Article 9” funds have sustainable investments as a measurable objective. In addition to not promoting environmental or social characteristics, "Article 6" funds have no sustainable objectives. For more information, please refer to https://eur-lex.europa.eu/eli/reg/2019/2088 .

Sustainable Finance Disclosure Regulation (SFDR) 2019/2088. EU Act that requires asset managers to classify funds into categories, “Article 8” funds promote environmental and social characteristics, “Article 9” funds have sustainable investments as a measurable objective. In addition to not promoting environmental or social characteristics, "Article 6" funds have no sustainable objectives. For more information, please refer to https://eur-lex.europa.eu/eli/reg/2019/2088/oj .

Average of prices of a sample of representative securities of a market, sector, etc. This average, which generally takes the form of an index, reflects the general trend of a market. It is used for comparison purposes and can be part of a Fund performance objective (outperformance, performance replication).

Beta measures the relationship between the fluctuations of the net asset values of the fund and the fluctuations of the levels of its reference indicator. Beta of less than 1 indicates that the fund “cushions” the fluctuations of its index (beta = 0.6 means that the fund increases by 6% if the index increases by 10% and decreases by 6% if the index falls by 10%). Beta higher than 1 indicates that the fund “magnifies” the fluctuations of its reference indicator (beta = 1.4 means that the fund increases by 14% when the index increases by 10% but also decreases by 14% when the index decreases by 10%). Beta of less than 0 indicates that the fund reacts inversely to the fluctuations of its reference indicator (beta = -0.6 means that the fund falls by 6% when the index increases by 10% and vice versa).

The interest rate pocket represents all of the bonds of the portfolio whose total weight can be expressed as a percentage of the Fund assets or rebased at 100%.

Investment based on analysis of individual companies, whereby that company's history, management, and potential are considered more important than general market or sector trends (as opposed to top down investing).

A company’s stock market value at any given moment. It is obtained by multiplying the number of shares of a company by its stock exchange price.

Carbon Emissions Direct: Greenhouse gas emissions generated from burning fossil fuels and production processes which are owned or controlled by the company (reference: GHG Protocol). Carbon Emissions First Tier Indirect: CO2 and other greenhouse gases emitted by the direct suppliers to a company. The most significant sources are typically purchased electricity (Scope 2 of the GHG Protocol) and employees' business air travel (reference: GHG Protocol).

Carbon Intensity Direct + first tier indirect CO2e emissions /USD mn for selected company against peer companies and peer group (carbon footprint).

START is our proprietary ESG system and stands for "System for Tracking and Analysis of a Responsible Trajectory". Our ESG research system blends third-party data sources with our in-house views, to provide a comprehensive analysis on companies regarding ESG risks and opportunities-analysis which constitutes a cornerstone of our Funds' investment process.

The carry of a bond refers to its yield over a given holding period, measured by the coupons regularly received. A bond's carry is considered positive when it is higher than money market yields.

A CLO is a financial investment that groups together a pool of loans contracted by companies. This basket of loans is divided into several tranches, each with its own level of risk and return on the underlying loans. At the top of the basket are the lowest-risk tranches, which are repaid first and therefore offer lower returns. Conversely, the riskiest tranches, at the bottom of the basket, offer potentially higher returns, but are more exposed to defaults because they are repaid last. Repayments and coupons on the underlying loans are distributed to investors in order of tranche priority. Companies make extensive use of these loan instruments as well as bonds to finance themselves. However, because of their apparent complexity, CLOs offer a higher yield than traditional bonds.

A CLO is a financial investment that groups together a pool of loans contracted by companies. This basket of loans is divided into several tranches, each with its own level of risk and return on the underlying loans. At the top of the basket are the lowest-risk tranches, which are repaid first and therefore offer lower returns. Conversely, the riskiest tranches, at the bottom of the basket, offer potentially higher returns, but are more exposed to defaults because they are repaid last. Repayments and coupons on the underlying loans are distributed to investors in order of tranche priority. Companies make extensive use of these loan instruments as well as bonds to finance themselves. However, because of their apparent complexity, CLOs offer a higher yield than traditional bonds.

Cocos or contingent convertible bonds, are slightly different to regular convertible bonds in that the likelihood of the bonds converting to equity is "contingent" on certain capital conditions.

Correlation is a measure of how securities or asset classes move in relation to each other. Highly correlated investments tend to move up and down together while investments with low correlation tend to perform in different ways in different market conditions, providing investors with diversification benefits. Correlation is measured between 1 (perfect correlation) and -1 (perfect opposite correlation). A correlation coefficient of 0 suggests there is no correlation.

A credit cycle describes the different phases of access to credit by borrowers. It alternates between periods of easily accessible funds to borrow due to low interest rates and periods of contraction where lending rules are more restrictive and interest rates are higher.

Performance of the previous day (Day - 1)

Developed countries are nations with advanced economies, strong industrial and service sectors, well-developed infrastructures and high standards of living. Examples include the USA, Western Europe, Japan and Australia.

A directional strategy is an investment strategy that strives to benefit from a rise or fall of a specific asset class price.

Dispersion in the financial markets refers to the variability or difference in valuations between different assets, sectors, regions or financial instruments within the same market or index. It is used to measure the diversity of returns within a group of assets. The higher the dispersion, the more significantly returns vary, and vice versa. High dispersion creates opportunities for active investors seeking higher performance for a given level of risk.

Radical change to an existing industry or market due to technological innovation

A draw down is usually quoted as the percentage between the peak and trough of an investment during a specific period. It can help to compare an investment's possible reward to its risk. Alternatively, when investing in certain types of funds, particularly venture capital funds, it can also refer to when an investor commits to invest a sum of money but doesn't give it all to the fund manager immediately. The fund manager makes the investments and draws down money as required.

A bond’s duration is the period beyond which interest rate variations will no longer affect its return. The duration is like a discounted average lifetime of all flows (interest and capital).

European Central Bank

Emerging country is used to describe a country whose economic situation is developing. This growth is calculated on the basis of GDP, new businesses and infrastructure, and the standard of living and quality of life of the population.

Companies that contribute the most to the energy transition and the reduction in global carbon emissions, for example, some large integrated mining or oil companies that have adopted drastic policies to shrink their carbon footprint and are expanding their commitment into renewables.

The equity component represents all of the equities of the portfolio (excluding derivatives) whose total weight can be expressed as a percentage of the Fund assets or rebased at 100%.

Environmental, Social and Governance.

Only the Equity and Corporate Bond holdings of the fund considered. Overall Fund Rating calculated using MSCI Fund ESG Quality Score methodology: excluding cash and non ESG-rated holdings, performing a weighted average of the normalized weights of the holdings and the Industry-Adjusted Score of the holdings, multiplied by (1+Adjustment%) which consists of the weight of positively trending ESG ratings minus the weight of ESG Laggards minus the weight of negatively trending ESG ratings. For a detailed explanation see “MSCI ESG Fund Ratings Methodology”, Section 2.3. Updated June 2021. https://www.msci.com/documents/1296102/15388113/MSCI+ESG+Fund+Ratings+Exec+Summary+Methodology.pdf/ec622acc-42a7-158f-6a47-ed7aa4503d4f?t=1562690846881.

Evergreen funds (also known as “open-ended" or "semi-liquid" funds): Investment vehicles with no fixed end date which provide more flexibility than closed-end funds, allowing investors to periodically invest into and redeem units. Evergreen funds also allow investors to be fully invested upon subscription.

The investment rate constitutes the volume of assets invested expressed as a percentage of the portfolio. Adding the impact of the derivatives to this investment rate results in the exposure rate, which corresponds to the real percentage of asset exposure to a certain risk. Derivatives can be used to increase the underlying asset's exposure (stimulation) or reduce it (hedging).

Fonds Commun de Placement (French common fund).

The Fed is the central bank of the United States. In setting US monetary policy, the Fed pursues the three objectives of maximising employment, stabilising prices and moderating long-term interest rates.

Potential to impact the long-term valuation of the company

A forward contract is a customized contract between two parties to buy or sell an asset at a specified price on a future date. A forward contract can be used for hedging or speculation, although its non-standardized nature makes it particularly apt for hedging. Unlike standard futures contracts, a forward contract can be customized to any commodity, amount and delivery date. A forward contract settlement can occur on a cash or delivery basis.

Less developed countries within the emerging markets. Investments in these countries may be associated with higher risks, such as increased political instability and lower liquidity, than more developed markets.

Percentage of holdings in a mutual fund that are sold in a specified period.

A private equity fund manager responsible for investment decisions and day-to-day fund management.

Companies providing products, services or solutions that are low carbon like renewable energies or electric vehicles.

Companies offering products, services or solutions that directly or indirectly enable other companies to cut their carbon emissions or enhance their energy efficiency (facilitators of solutions); for example, semiconductor companies that provide key components for electric vehicles.

This sector includes companies involved in the medical field, such as pharmaceuticals, medical devices and healthcare services.

A loan or bond rated below investment grade because of its higher default risk. The return on these securities is generally higher.

High-water mark is the highest level of value reached by an investment account or portfolio. It is often used as a threshold to determine whether a fund manager can gain a performance fee. Investors benefit from a high-water mark by avoiding paying performance-based bonuses for poor performance.

This sector covers companies that develop or distribute technology products and services, including software, hardware, IT services and semiconductors.

A loan or bond that rating agencies have rated AAA to BBB-, generally indicating relatively low default risk.

The Investment Rate constitutes the volume of assets invested expressed as a percentage of the portfolio. Adding the impact of the derivatives to this investment rate results in the exposure rate, which corresponds to the real percentage of asset exposure to a certain risk. Derivatives can be used to increase the underlying asset’s exposure (stimulation) or reduce it (hedging).

Initial Public Offering, when a company’s shares are introduced on a stock market.

Initial Public Offering, when a company’s shares are introduced on a stock market.

An issuer corresponds to the entity which issue a financial instrument. A single issuer can issue several financial instruments with different characteristics. Therefore, in a portfolio construction a portfolio manager can select several financial instruments issued by the same issuer.

The SRI label created in 2016 by the French Ministry of the Economy and Finance, aims to identify investment funds with measurable and concrete results, thanks to a proven socially responsible investment methodology. It is awarded at the end of a strict process conducted by an independent body, which is responsible for checking that the Fund complies with the label's specifications. For more information, follow this link: https://www.lelabelisr.fr/wp-content/uploads/SRI-Label-Guidelines_EN_july2020updates_modifications.pdf

An investor that provides capital to a private equity fund but has no active role in managing the fund.

An investor that provides capital to a private equity fund but has no active role in managing the fund.

Mergers & Acquisitions, or various ways for companies to combine or consolidate their assets.

Macroeconomic fundamentals refer to indicators such as growth outlook, current account, balance of payments, currency or inflation of a country, among others which are used to analyse the economic status of a country.

A measure of a company's size, calculated by multiplying the total number of shares in issue by the current share price. Companies are commonly grouped according to size as small cap, mid cap or large cap. There is no consensus on the monetary boundaries of these ranges but as a rough guide in the US market: large cap is over $10 billion, mid cap is $2 billion–$10 billion and small cap is $250 million–$2 billion.

The market capitalization of the stocks of companies with market values between $3 to $10 billion.

A bond’s modified duration measures the risk attached to a given change in the interest rate. Modified duration of +2 means that for an instantaneous 1% rate increase, the portfolio’s value would drop by 2%.

Monetary policy consists of the actions through which a central bank seeks to achieve specific macroeconomic objectives, in particular by managing the country’s money supply and interest rates.

Price of the unit (FCP), shares (SICAV, OEIC).

Portfolio construction is a result of Fund manager views and market analysis with no bias to any benchmark.

Investments in funds that are in the fundraising phase.

Negative, material, or potentially material effects on sustainability factors that result from, worsen, or are directly related to investment choices or advice performed by a legal entity. Examples include GHG emissions and carbon footprint.

In stock market investing, a quality company is one that generates strong and predictable cash flow with a high return on capital and attractive growth prospects. Also, it is supported by management whose interests are aligned with their shareholders and the company's stakeholders.

Quantitative easing is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply.

The rating measures the creditworthiness of a borrower (bond issuer). Ratings are published by rating agencies and offer the investor reliable information on the risk profile associated with a debt security.

Average of the prices of a sample of representative securities of a market, sector, etc. This average, which generally takes the form of a stock index, reflects the general trend on the market. It thus makes it possible to measure the performance of a fund compared to an entity independent of the management company, (e.g. CAC 40, Euro Stoxx 50).

Strategies that seek to exploit differences in the price or rate of the same or similar securities.Those strategy trade on gaps, rather than the price of a specific security alone. The relative strategie may take positions if the gap between prices or rates is considered to have reached its peak and is thus expected to shrink, or may take a position in a security if similar securities are experiencing price changes.

Risk Scale from the KID / KIID (Key Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time.

Risk Scale from the KID / KIID (Key Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time.

Renminbi Qualified Foreign Institutional Investor: This is a Foreign Institutional Investor license issued by the CSRC (China Regulatory Securities Commission) which allows to directly invest in the Chinese domestic market and have access to that of shares and bonds onshore denominated in RMB

The Sustainable Finance Disclosure Regulation (SFDR) is a European regulation that requires asset managers to classify their funds as either "Article 8" funds that promote environmental and social characteristics, or "Article 9" funds that promote sustainable investment with measurable objectives, or "Article 6" funds that do not promote environmental or social characteristics and have no sustainable objectives.

The Sharpe ratio measures the excess return over the risk-free rate divided by the standard deviation of this return. It thus shows the marginal return per unit of risk. When it is positive, the higher the Sharpe ratio, the more risk-taking is rewarded. A negative Sharpe ratio does not necessarily mean that the portfolio posted a negative performance, but rather that it performed worse than a risk-free investment.

Société d’Investissement à Capital Variable (Open-ended investment company with variable capital).

The market capitalization of the stocks of companies with market values less than $3 billion.

Socially responsible investment (SRI). A fund that adopts a responsible investment approach is one that selects companies and public entities (governments or public services) whose business model and/or development strategy helps them to have a favourable impact on the environment and society.

Sustainable Finance Disclosure Regulation, an EU Act that requires asset managers to classify funds into categories: “Article 8” funds promote environmental and social characteristics, “Article 9” funds have sustainable investments as a measurable objective.

The SFDR defines sustainable investment as an investment in an economic activity that contributes to an environmental or social objective, provided that the investment does not significantly harm any environmental or social objective and that the investee companies follow good governance practices.

In the context of an individual company, taxonomy alignment is defined as the proportion of a company's revenue that comes from activities that meet certain environmental criteria. In the context of an individual fund or portfolio, alignment is defined as the portfolio-weight weighted average taxonomy alignment of included companies. For more information, please follow this link: https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/documents/sustainable-finance-taxonomy-faq_en.pdf

Treasury Inflation-Protected Securities

An investment strategy which finds the best sectors or industries to invest in, based on analysis of the corporate sector as a whole and general economic trends (as opposed to bottom up investing).

Total return is the actual rate of return of an investment or a pool of investments over a given evaluation period. Total return includes interest, capital gains, dividends and distributions realized over a given period of time. A Total return strategy aims to derive performance from interest, capital gains, dividends and distributions realized over a given period of time.

The “Towards Sustainability” label, under the initiative of Febelfin, the Belgian financial sector federation, is a quality standard that certifies that a fund is managed with sustainability in mind and is not exposed to companies with very unsustainable activities. The label is awarded following a thorough analysis of a fund. For more information, follow this link: https://www.towardssustainability.be/

The success or failure of a Fund in the past

Undertakings for Collective Investments in Transferable Securities. UCITS funds are authorised funds that can be sold in any country in the EU. UCITS III regulations allow funds to invest in a wider range of financial instruments, including derivatives.

This is an active approach that is unconstrained by any reference indicator, thereby allowing greater flexibility in terms of exposure management and enabling the Fund to face extremely varied market environments.

Underpenetrated sectors refer to business sectors which are not well-established or barely developed and which therefore may have strong long-term growth potential.

Value at Risk (VaR) represents an investor’s maximum potential loss on the value of a financial asset portfolio, based on a holding period (20 days) and confidence interval (99%). This potential loss is expressed as a percentage of the portfolio’s total assets. It is calculated on the basis of a sample of historical data (over a two-year period).

Range of price variation of a security, fund, market or index, which enables the measurement of risk over a given period. It is determined using the standard deviation obtained by calculating the square root of the variance. The variance is obtained by calculating the average deviation from the mean, which is then squared.The greater the volatility, the greater the risk.

Yield to maturity corresponds to the concept of actuarial yield. It is, at the time of calculation, the rate of return offered by a bond in the event it is held until maturity by the investor. For target date funds (2027, 2029, 2031) and the Carmignac Portfolio Crédit fund, this rate is calculated at the fixed income bucket level.

This is the lowest yield to maturity in euro (including the cost of hedging investment currencies and before management fees) calculated on all assumptions regarding the repayment of the bonds making up the portfolio. For target date funds (2025, 2027, 2029) and the Carmignac Portfolio Crédit fund, this rate is calculated at the fixed income bucket level.

Corresponds to the performance from the first day of the current calendar or financial year to the current date. The performance is calculated after the last price/NAV of the previous year (i.e. after 31/12/YYYY).

The yield to worst is the lowest gross rate of return calculated on the redemption scenarios of all bonds within the portfolio. For target date funds (2025, 2027, 2029) and the Carmignac Portfolio Crédit fund, this rate is calculated at the fixed income bucket level.