Carmignac European Leaders: Sustainable investing in Europe’s innovative leaders
A European ex-UK strategy which capitalises on a robust process, a sustainable approach, and a passion for innovation.
Commitment to our UK clients
In May 2019, we aligned Mark Denham’s expertise in European Equities to our UK client base1 by launching FP Carmignac European Leaders. This dedicated OEIC investing in Europe ex UK equities follows Mark’s robust process, refined over more than 16 years, alongside his passion for innovation and sustainability.
Socially Responsible Investment
Socially responsible investing is integral to Mark’s process. He considers environmental, social and governance (ESG) criteria when assessing the potential risk and return for a given stock.
Starting with an investment universe of 1600 of the largest companies in Europe, he filters them using a range of factors related to their profitability and reinvestment rates. From a combination of these metrics, he focusses on the c.500 which score well, narrowing down the universe to the companies which demonstrate self-sustaining growth. Mark then applies SRI exclusions and screens to reduce it by another 20%. Finally, he conducts fundamental research, including forecasting, modelling, and valuation, to select only the best 30-40 holdings for this high conviction portfolio.
To my mind, you can’t say a company has the best long-term prospects if it doesn’t score well in environmental, social and governance criteria
Innovation at the center stage: The biotech case
One of the key drivers Mark looks for when searching for names across Europe is innovation. Innovation can be found within multiple sectors - for example, within Healthcare2, it is fundamental to the Biotech space.
It is often thought that investing in the Biotech space requires a higher threshold in terms of risk/return appetite, the sub-sector is perceived to be more volatile than others. Contrary to popular belief, there are sizable Biotech names in Europe with enough liquidity where we believe we can generate alpha whilst keeping risk under control. As part of Mark’s rigorous process, he sticks to a maximum exposure (around 8-9%)3 within his Fund to the Biotech space, so as to contain the risk at a portfolio level. This ‘cap’ respects the quality/growth bias of the Fund while allowing Mark the option to seize these opportunities. Moreover, he only invests in biotech companies where there is a diversified pipeline of products treating a range of illnesses, and at different stages of clinical development. Often they will also have a product which has been de-risked through partnership with a larger pharmaceutical company.
Innovation is exciting, and when researched thoroughly through a tried and tested process, it can yield results. Mark’s skilful ability to stock-pick from a diverse universe represents one of the competitive advantages of FP Carmignac European Leaders and can be seen through his Biotech investments to date.
FP Carmignac European Leaders A GBP Acc* performance
*A GBP Acc share class ISIN code: GB00BJHPHZ49. Risk Scale from the KIID (Key Investor Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time.
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Source: Carmignac, 15/05/2020.
1 FP Carmignac European Leaders replicates Carmignac Portfolio Grande Europe strategy excluding investments in the UK. Mark Denham became Carmignac Portfolio Grande Europe lead manager in November 2016. He has been covering the region for 26 years, including 13 years at Aviva Investors, prior to joining Carmignac in September 2016.
2 Healthcare Providers, Medical Equipment, Medical Supplies, Pharmaceuticals, and Biotechnology sub-sectors.
3 The 8-9% is an indicative cap for illustrative purposes which can vary overtime.
4 Comparator benchmark: MSCI Europe Ex UK Net Total Return USD. Past performance is not necessarily indicative of future performance. The return may increase or decrease as a result of currency fluctuations. Performances are net of fees (excluding possible entrance fees charged by the distributor).
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This document may not be reproduced, in whole or in part, without prior authorisation from the Investment Manager. This document does not constitute a subscription offer, nor does it constitute investment advice. 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 Financial Conduct Authority (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, England, CM1 3BY; Registered in England and Wales with number 4162989. Carmignac Gestion Luxembourg SA, UK Branch (Registered in England and Wales with number FC031103, CSSF agreement of 10/06/2013) has been appointed as the Investment Manager and distributor in respect of the Company. Access to the Company may be subject to restrictions with regard to certain persons or countries. The Company is not registered in North America, in South America, in Asia nor is it registered in Japan. The Company has not been registered under the US Securities Act of 1933. The Company 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/or FATCA. The Company presents a risk of loss of capital. The risks and fees are described in the KIID (Key Investor Information Document). The Company’s prospectus, KIIDs and annual reports are available at www.carmignac.com or upon request to the Investment Manager. The KIID must be made available to the subscriber prior to subscription. This material was prepared by Carmignac Gestion Luxembourg SA and is being distributed in the UK by the Investment Manager. • Carmignac Gestion - 24 place Vendôme - F-75001 Paris. Tel: (+33) 01 42 86 53 35 - Investment management company approved by the AMF - Public limited company with share capital of € 15,000,000 - RCS Paris B 349 501 676.• Carmignac Gestion Luxembourg - City Link - 7 rue de la Chapelle - L-1325 Luxembourg - Tel: (+352) 46 70 601. Subsidiary of Carmignac Gestion - Investment fund management company approved by the CSSF - Public limited company with share capital of € 23,000,000 - RC Luxembourg B 67 549.