Carmignac Portfolio Patrimoine: Letter from the Fund Managers - Q2 2025
Carmignac Portfolio Patrimoine F EUR Acc delivered a return of +4.9% in the second quarter of 2025, outperforming its reference indicator, which recorded a decline of -0.4% over the same period.
Market environment
The second quarter of 2025 was marked by significant volatility across both equity and bond markets, characterized by alternating periods of decline and renewed risk appetite.
The quarter opened on a tense footing following President Trump’s announcement on April 2 of broad-based tariffs, which triggered a sharp market sell-off and pushed major equity indices into bear market territory. However, market sentiment quickly reversed: a 90-day suspension of tariffs, announced on April 9, sparked a substantial rebound.
On the macroeconomic front, US economic indicators pointed to some weakness: first-quarter GDP growth was negative, and household consumption slowed. Nonetheless, the labor market remained resilient, and inflation—while moderate—continued to exceed the Federal Reserve’s target. The Fed adopted a cautious tone, emphasizing the mounting risks to both employment and price stability.
By the end of June, the S&P 500 and Nasdaq 100 had not only recovered their early losses but also reached new all-time highs. This upward momentum was largely fueled by large-cap technology stocks and shares linked to artificial intelligence. In the bond market, the US yield curve steepened, with 30-year yields reaching their highest levels since 2007. The US dollar, meanwhile, was the primary casualty of this environment, declining by 8% against the euro over the quarter.
In Europe, falling inflation, monetary easing, and the approval of a major infrastructure and defense investment package in Germany underpinned equity market performance. European equity indices achieved gains comparable to those of US and emerging markets (in euro terms). The yield curve steepened as short-term rates fell and long-term rates rose modestly towards the end of the quarter, particularly after the German budget vote. Credit markets experienced similar fluctuations, mirroring movements in equities.
Emerging markets benefited from the softer US dollar and renewed interest from global investors. Taiwan and South Korea were notable outperformers, buoyed by strong exposure to the semiconductor sector and, in South Korea’s case, optimism following the election results.
How did we fare in this context?
Amid heightened market volatility, Carmignac Portfolio Patrimoine outperformed its reference indicator, delivering strong gains over the quarter. All performance drivers contributed positively to the strategy’s success.
The primary source of outperformance, both in absolute and relative terms, was stock selection—particularly within the technology sector. Reinforcing our core convictions in April allowed us to further enhance returns thereafter. Our targeted exposure to the technology value chain in Asia also significantly contributed to this positive momentum.
Our diversification strategies and equity hedges proved beneficial as well. Positions in gold mining stocks performed strongly, capitalizing on renewed investor demand for safe-haven assets in an uncertain climate. We further optimized our hedging approach: index put options helped cushion losses during market downturns, while exposure to the VIX (volatility index) offered effective protection against sharp fluctuations.
In the bond segment, our positioning contributed meaningfully to performance. Credit carry continued to generate returns, underlining the high quality of our selected issuers. At the same time, we actively managed interest rate sensitivity, particularly in the US, to capture gains from falling rates following the escalation of the trade dispute early in the quarter, as well as to benefit from curve flattening and the subsequent sharp rise in long-term yields as investor skepticism intensified regarding the Trump administration’s policy agenda.
Finally, our strategic decision to maintain a consistent bias toward the euro proved particularly advantageous and was a key driver of outperformance for the quarter. Additionally, selective exposure to certain South American currencies further enhanced the portfolio’s overall results.
Outlook
The principal consequence of the current environment—shaped by ongoing trade tensions and heightened uncertainty in the United States—has been the continued weakening of the US dollar. This trend has been exacerbated by investors’ increasing willingness to diversify their portfolios across currencies. As such, we maintain a strong conviction in favoring the euro over the US dollar.
In equities, given that a US recession now appears less likely, corporate fundamentals remain robust, and there is renewed optimism in both Europe and emerging markets, we are maintaining our equity exposure at the upper end of our allocation range. Technological innovation also continues to gain traction, largely undeterred by political uncertainties, and thus remains a compelling long-term investment theme for the fund throughout the entire value chain. However, with valuations elevated and the risk of a resurgence in inflation persisting, we took advantage of lower market volatility during the quarter to further reinforce our downside protection, notably through put options on both the VIX and major US indices. Additionally, our preference is for companies with strong pricing power and solid balance sheets, capable of weathering a sustained period of higher interest rates and preserving margins in an inflationary environment. We also continue to view gold as a valuable safe-haven asset.
On the fixed income side, markets appear overly pessimistic regarding global growth prospects and too optimistic about the speed at which US inflation will revert to target levels. Furthermore, expansionary fiscal policies across various economies suggest that long-term rates are likely to rise. Consequently, we maintain interest rate sensitivity close to zero or even negative, and continue to favor investments in inflation-linked instruments.
In credit, while carry remains appealing, prevailing valuation levels lead us to maintain our hedges.
This disciplined approach enables us to preserve a robust and well-balanced portfolio, effectively combining performance drivers with stringent risk management, in preparation for continued uncertainty in the weeks ahead.
Carmignac Portfolio Patrimoine
Carmignac Portfolio Patrimoine F EUR Acc
- Recommended minimum investment horizon
- 3 years
- Risk indicator*
- 4/7
- 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
Fees
- Maximum subscription fees paid to distributors
- -
- Redemption Fees
- -
- Conversion Fee
- 0%
- Ongoing Charges
- 1.15%
- Management Fees
- 0.85% MAX
- Performance Fees
- 20.00% of the outperformance to the reference indicator over the year. Performance fee is not charged until previous underperformance is offset
Footnote
Performance
| Carmignac Portfolio Patrimoine | +6.2 | +7.6 | +2.7 | −8.8 | −0.3 | +13.4 | +11.2 | −10.8 | +0.5 | +4.4 |
| Reference Indicator | −3.0 | +11.4 | +7.7 | −10.3 | +13.3 | +5.2 | +18.2 | −0.1 | +1.5 | +8.1 |
| Carmignac Portfolio Patrimoine | +6.6% | +3.4% | +1.8% |
| Reference Indicator | +4.4% | +4.5% | +4.9% |
Source: Carmignac at 30 Jun 2025.
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: 40% MSCI AC World NR index + 40% ICE BofA Global Government Index + 20% €STR Capitalized Index. Rebalancing Frequency: Quarterly