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Carmignac Portfolio Emerging Discovery: Letter from the Fund Managers

Author(s)
Xavier HOVASSE,Amol GOGATE
Published on
5 August 2024
Read time
3 minute(s) read

Carmignac Portfolio Emerging Discovery (FW GBP ACC share class, ISIN LU09926300861) continued its good run returning [+5.34%] during the second quarter versus [+4,20%] for its reference indicator2 taking the overall returns for the first half of the year to [+15.01%] compared to [+5.63%] for its reference indicator. The fund has an Article 8 designation with over 50% of its holdings contributing to United Nations Sustainable Development Goals (UN SDGs)3.

Performance review

The fund’s holdings in India contributed well as also specific long term holdings in China (SITC), Turkey (BIM) and Vietnam (FPT). On the other hand, the fund’s exposure to the semiconductor supply chain in Taiwan and South Korea did not work the way we had hoped.

As we had highlighted before, 2024 is the year of elections around the world and we had some of the most consequential elections in Emerging Markets in Q2. In India, Prime Minister Modi did not do as well as expected but returned to power with the support of long-standing alliance partners. The political continuity in India is a relief as we believe the Modi government has prepared the ground for a capex upcycle which, if it becomes reality, can greatly benefit India. On the other hand, the election results from Mexico have caused worries in the markets. Our investments in Mexico are mainly concentrated around the near-shoring theme which we believe is structural and mutually beneficial to both the USA and Mexico. So we used the sell-off in Mexico and Latin America in general to increase our positions. The final major election was the one in South Africa. While there was no clear winner, the government formation has boosted optimism for a government more focused on improving the economy. Given this outlook we bought into South African equities for the first time in many years.

Changes to the Fund

Even as the Fund benefits from the several positive trend across our markets (e.g. growth in India, Artificial Intelligence, near-shoring etc), our focus is on reducing risks in the portfolio by increasing diversification. For example, we are looking to increase exposure to geographies such as South-East Asia which have been out-of-favour. With this in mind we initiated a position in Asia Commercial Bank (ACB) in Vietnam. We believe ACB is one of the best-run banks in the private sector in Vietnam, has a long runway for growth and can be a great long-term compounder for the Fund. We do worry about the political risks in Vietnam but also believe that the growth opportunity is compelling and low starting valuations will protect us.

In a similar vein, we have started building a position in the Clicks Group in South Africa. Clicks is a very well-managed chain of pharmacies and brands. As mentioned earlier, the political changes in South Africa gave us the confidence to increase exposure to that country. We continue to evaluate IPOs across our geographies but participating only in those that can be long term holdings. One such business we invested in was TBO Tek which is a global travel distribution platform based in India. The new investments have been funded by reducing our holdings in businesses which we like structurally but where valuations have gone beyond our zone of comfort in the near term.

Outlook going forward

The focus of the Fund continues to be on identifying long-term compounders in Emerging Markets. Discussion on Emerging Markets often centers around China and mega-cap stocks. We believe that global equity markets have not been paying sufficient attention to wonderful businesses that are bubbling up below the surface. However we can also see increasing investor interest in EM, especially the high growth countries/ industries which is reassuring.

We recognize that there are signs of slowdown in the global economy which may also mean equity markets switch away from countries/ industries/ themes that have been recent ‘winners’ to more defensive businesses. We aim to take advantage of the diversity of our investment universe to ensure our portfolio is resilient to short-term shocks while staying true to our long term objective.

1Performance of the FW GBP acc share class ISIN code: LU0992630086. 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). From 01/01/2013 the equity index reference indicators are calculated net dividends reinvested.
250% MSCI EM SmallCap (GBP) + 50% MSCI EM MidCap (GBP) (Reinvested net dividends rebalanced quarterly).
3To find out more about the United Nations Sustainable Development Goals, please visit https://sdgs.un.org/goals.

Carmignac Portfolio Emerging Discovery

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Carmignac Portfolio Asia Discovery FW GBP Acc

ISIN: LU0992630086
Recommended minimum investment horizon
5 years
Risk indicator*
5/7
SFDR - Fund Classification**
Article 8

*Risk Scale from the KIID (Key Investor 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

Equity: The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization.
Emerging Markets: Operating conditions and supervision in "emerging" markets may deviate from the standards prevailing on the large international exchanges and have an impact on prices of listed instruments in which the Fund may invest.
Currency: Currency risk is linked to exposure to a currency other than the Fund’s valuation currency, either through direct investment or the use of forward financial instruments.
Liquidity: Temporary market distortions may have an impact on the pricing conditions under which the Fund might be caused to liquidate, initiate or modify its positions.
The Fund presents a risk of loss of capital. Please refer to the Fund’s prospectus to view the exhaustive list of risks.

Fees

ISIN: LU0992630086
Maximum subscription fees paid to distributors
-
Redemption Fees
-
Conversion Fee
-
Ongoing Charges
1.53%
Management Fees
1.20% MAX
Performance Fees
-

Footnote

Performance

ISIN: LU0992630086
Carmignac Portfolio Asia Discovery+35.2+11.5+25.1+10.9−17.2+20.0+6.5+5.2−6.9+24.1
Reference Indicator+29.3+18.7+4.8+12.2−6.7+13.8+11.3+8.0−10.7+22.9
Carmignac Portfolio Asia Discovery+26.8%+11.0%+9.2%
Reference Indicator+20.5%+11.3%+8.9%

Source: Carmignac at 30 Oct 2026.
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: MSCI EM Asia Ex-China IMI 10/40 Capped NR index

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Marketing communication. Please refer to the KID/KIID, prospectus of the fund before making any final investment decisions. This document is intended for professional clients.

This material may not be reproduced, in whole or in part, without prior authorisation from the Management Company. This material does not constitute a subscription offer, nor does it constitute investment advice. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. This material has been provided to you for informational purposes only and may not be relied upon by you in evaluating the merits of investing in any securities or interests referred to herein or for any other purposes. The information contained in this material may be partial information and may be modified without prior notice. They are expressed as of the date of writing and are derived from proprietary and non-proprietary sources deemed by Carmignac to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Carmignac, its officers, employees or agents.

Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency-hedged.

Reference to certain securities and financial instruments is for illustrative purposes to highlight stocks that are or have been included in the portfolios of funds in the Carmignac range. This is not intended to promote direct investment in those instruments, nor does it constitute investment advice. The Management Company is not subject to prohibition on trading in these instruments prior to issuing any communication. The portfolios of Carmignac funds may change without previous notice. The reference to a ranking or prize, is no guarantee of the future results of the UCIS or the manager.

Morningstar Rating™ : © Morningstar, Inc. All Rights Reserved. The information contained herein: is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Access to the Funds may be subject to restrictions regarding certain persons or countries. This material is not directed to any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the material or availability of this material is prohibited. Persons in respect of whom such prohibitions apply must not access this material. Taxation depends on the situation of the individual. The Funds are not registered for retail distribution in Asia, in Japan, in North America, nor are they registered in South America. Carmignac Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. The Funds 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 FATCA.
The risks, fees and ongoing charges are described in the KID (Key Information Document). The KID must be made available to the subscriber prior to subscription. The subscriber must read the KID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds present a risk of loss of capital.

The Funds’ prospectus, KIDs, NAVs and annual reports are available at www.carmignac.com/en, or upon request to the Management Carmignac Portfolio refers to the sub-funds of Carmignac Portfolio SICAV, an investment company under Luxembourg law, conforming to the UCITS Directive. The French investment funds (fonds communs de placement or FCP) are common funds in contractual form conforming to the UCITS or AIFM Directive under French law.

  • In the United Kingdom: the Funds’ respective prospectuses, KIIDs and annual reports are available at www.carmignac.com/en-gb, or upon request to the Management Company, or for the French Funds, at the offices of the acilities Agent, Carmignac UK Ltd, 2 Carlton House Terrace, London, SW1Y 5AF. This document was prepared by Carmignac Gestion, Carmignac Gestion Luxembourg or Carmignac UK Ltd. 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 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, Essex, CM1 3BY, UK; Registered in England and Wales with number 4162989. Carmignac Gestion Luxembourg SA has been appointed as the Investment Manager and distributor in respect of the Company. Carmignac UK Ltd (Registered in England and Wales with number 14162894) has been appointed as a sub-Investment Manager of the Company and is authorised and regulated by the Financial Conduct Authority with FRN:984288.

  • In Switzerland: the prospectus, KIDs and annual report are available at www.carmignac.com/en-ch, or through our representative in Switzerland, CACEIS (Switzerland), S.A., Route de Signy 35, CH-1260 Nyon. The paying agent is CACEIS Bank, Montrouge, Nyon Branch / Switzerland, Route de Signy 35, 1260 Nyon.

  • In Belgium: This document is intended for professional clients. This content has not been validated by FSMA. The decision to invest in the promoted fund should take into account all its characteristics or objectives as described in its prospectus. This communication is published by Carmignac Gestion S.A., a portfolio management company approved by the Autorité des Marchés Financiers (AMF) in France, and its Luxembourg subsidiary Carmignac Gestion Luxembourg, S.A., an investment fund management company approved by the Commission de Surveillance du Secteur Financier (CSSF). “Carmignac” is a registered trademark. “Investing in your Interest” is a slogan associated with the Carmignac trademark. This document does not constitute advice on any investment or arbitrage of transferable securities or any other asset management or investment product or service. The information and opinions contained in this document do not take into account investors’ specific individual circumstances and must never be interpreted as legal, tax or investment advice. The information contained in this document may be partial and could be changed without notice. This document may not be reproduced in whole or in part without prior authorisation. The risks and fees are described in the KID (Key Information Document). The prospectus, KID, the net asset-values and the latest (semi-) annual management report may be obtained, free of charge, in French or in Dutch, from the management company (tel. +352 46 70 60 1) or by consulting its website or www.fundinfo.com. These materials may also be obtained from Caceis Belgium S.A., the financial service provider in Belgium, at the following address: avenue du port, 86c b320, B-1000 Brussels. The Fund (fonds commun de placement or FCP) is a common fund in contractual form conforming to the UCITS Directive under French law. Access to the Fund may be subject to restrictions regarding certain persons or countries. The Funds are not registered for retail distribution in Asia, in Japan, in North America, nor are they registered in South America. Carmignac Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. The Funds 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 FATCA. In case of subscription to a fund subject to Article 19bis of the Belgian Income Tax Code (CIR92), the investor will have to pay, upon redemption of his or her shares, a withholding tax of 30% on the income (in the form of interest, or capital gains or losses) derived from the return on assets invested in debt claims. Distributions are subject to withholding tax of 30% without income distinction. In case of subscription in a French investment fund (fonds commun de placement or FCP), you must declare on tax form, each year, the share of the dividends (and interest, if applicable) received by the Fund. Any complaint may be referred to complaints@carmignac.com or CARMIGNAC GESTION - Compliance and Internal Controls - 24 place Vendôme Paris France or on the website www.ombudsfin.be.

The Management Company can cease promotion in your country anytime. Investors have access to a summary of their rights at section 5 entitled "summary of investor rights" on the following links: UK ; Switzerland ; France ; Luxembourg ; Sweden. Belgium (French) ; Belgium (Dutch)

For Carmignac Portfolio Long-Short European Equities: Carmignac Gestion Luxembourg SA in its capacity as the Management Company for Carmignac Portfolio, has delegated the investment management of this Sub-Fund to White Creek Capital LLP (Registered in England and Wales with number OCC447169) from 2nd May 2024. White Creek Capital LLP is authorised and regulated by the Financial Conduct Authority with FRN : 998349.

Carmignac Private Evergreen refers to the Private Evergreen sub-fund of the SICAV Carmignac S.A. SICAV – PART II UCI, registered with the Luxembourg RCS under number B285278.