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FP Carmignac Global Equity Compounders: Letter from the Fund Managers

Author(s)
Mark DENHAM,Obe EJIKEME
Published on
13 January 2025
Read time
4 minute(s) read
+2.24%
Performance of the Fund in the Q4 vs +6.93% for its comparator benchmark1 (A GBP Share class).
+17.63%
Performance of the Fund in 2024 vs +20.79% for its comparator benchmark.
+73.88%
Performance of the Fund since inception2 vs +91.61% for its comparator benchmark.

Over the fourth quarter, FP Carmignac Global Equity Compounders A GBP Acc recorded a performance of +2.24%, underperforming the MSCI World, which posted a gain of +6.93%. For the year 2024, the fund achieved a performance of +17.63%, compared to a rise of +20.79% for its comparator benchmark.

Market environment during the period

The year 2024 witnessed a remarkable performance in equity markets, particularly in the United States (U.S)- where stock markets experienced robust growth, with major indices reaching unprecedented heights. This exceptional performance was driven by three key factors: strong corporate profits, easing monetary policy, and significant enthusiasm surrounding artificial intelligence (AI) technologies in the first half of the year. The latter half of 2024 saw market gains further bolstered by the prospects, and reaction to, a second Trump presidency. The AI boom led to a concentration of market gains in a handful of mega-cap tech companies, especially in the first semester. Later, a broadening of performance drivers was observed, with cyclical and unprofitable growth companies benefiting from the anticipation of a Trump 2.0 administration. However, the equity market landscape was not uniform globally. European equities notably underperformed compared to their U.S. counterparts, hampered by political instability, economic weakness, limited exposure to the AI sector and the attendant risk of tariff rises.

How did we fare in this context?

The fund's performance in the year can be divided into two distinct phases. During the first half, global disinflation and U.S. economic resilience bolstered investor confidence, propelling the Fund's upward trajectory. In this period, the fund outperformed the MSCI World, primarily due to successful stock picking in the Technology, Healthcare, and Consumer Staples sectors. However, as the U.S. election approached, and despite initial rate cuts from the Federal Reserve and the European Central Bank, our quality companies underperformed the markets. Our decision to maintain a defensive bias proved detrimental amid a cyclical rebound. Sectors such as media, industrials, and consumer discretionary, where we had minimal to no exposure, were among the top performers during this period.

In our year-end review, Technology names emerged as a significant area of exposure and the main contributors to performance. Our active management of companies like Nvidia, a stock we've held since the portfolio's inception in 2019, proved successful. Nvidia once again topped the list of contributors for the year. Surprisingly, the second-best contributor was a European company: SAP. The German software giant continued to thrive with its transition to cloud-based solutions, reporting over 25% growth in cloud software and a 28% increase in operating profit, benefiting from earlier investments in cloud products. Other tech companies considered more defensive, such as Oracle, Microsoft, and ServiceNow, also had exceptional years, with performances ranging from 20% to 60%.

The Healthcare sector remained the fund's second-largest exposure area. Despite the broader sector's poor performance, our selected stocks performed well, making the sector a positive contributor overall. Companies like Lonza, Eli Lilly, and Stryker had very strong years, outperforming their peers. Our active management of Novo Nordisk also yielded positive results, contributing to the fund's overall performance despite a negative trend in 2024. Novo Nordisk has been a cornerstone of our fund for years, and we believe their GLP-1 products for diabetes and obesity will drive growth for years to come. However, during the second half of the year, we grew cautious ahead of a late-stage clinical trial for their next-generation product, Cagrisema, where expectations were already high. We reduced our holding from 9% at the year's start to about 2.5% before the trial results. The drug's performance, while impressive with 23% weight loss after a year, fell short of expectations, causing a sharp stock decline. We view this drop as an overreaction and have begun to increase our exposure again, believing the company can achieve 20-25% annual profit growth in the medium term as supply bottlenecks ease. Unfortunately, other favoured companies like Align Technology, Vertex, and Demant struggled and posted negative performances for the year.

In the consumer space, our U.S. staples convictions performed well, especially in the first half. However, several consumer names negatively impacted our fund's performance, with L'Oreal being the worst performer. The company reported disappointing organic growth, showing a sequential slowdown primarily due to weaker-than-expected Chinese demand. L'Oreal also projected that the industry would see growth normalize to pre-COVID levels of 4-5% from 2025 onwards. We maintain our exposure to the company, viewing these as modest growth fluctuations compared to other sectors, and find the current valuations appealing for long-term investors like ourselves.

Outlook & Positioning

Our macro-overlay framework continues to suggest a defensive approach towards equity markets. Given the high valuations in the US, there is little room for earnings disappointments in 2025, making it crucial to focus on quality companies with strong profitability. This cautious stance is reflected in our portfolio adjustments and sector allocations.

Despite the recent turbulence in the healthcare sector following the proposed appointment of RF Kennedy Jr. as Head of Health and Human Services in the Trump administration, we maintain a strong conviction in this sector. The market's negative reaction to Mr. Kennedy's perceived stance on vaccinations is, in our view, an overreaction. We anticipate that his primary focus will be on the food and beverage sector and related ingredient issues, rather than on healthcare. Consequently, we continue to hold a significant proportion of our fund in pharmaceutical, medical device, and life science companies, confident in their long-term potential despite two years of underperformance relative to the broader market.

In recent months, we have strategically added several new names to our portfolio, particularly in the US market. Notable additions include Amazon and Home Depot, both of which we believe offer robust growth prospects and align with our focus on quality and profitability. Additionally, we have included Cadence, a semiconductor design software company, which we find attractive due to its market position and recent derating. However, we prudently reduced our position in Cadence following a rally after their Q3 numbers.

We have also increased our investment in Vertex Pharmaceuticals, despite a not unexpected disappointment over their pain drug trial result in LSR, a high-risk pain indication. We remain optimistic about Vertex's opportunities in acute pain and other areas, reinforcing our commitment to the healthcare sector.

Source: Carmignac, Bloomberg, data as of 31/12/2024. Performance of the A GBP Acc share class ISIN code: GB00BMGLBK75. 1Comparator Benchmark: MSCI WORLD (USD, Reinvested net dividends). 215/05/2020. Past performance is no guarantee of future results. They are net of fees (excluding any entry fees applied by the distributor). Past performance is not necessarily indicative of future performance. The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency-hedged. Performances are net of fees (excluding possible entrance fees charged by the distributor).

FP Carmignac Global Equity Compounders

A global, high-conviction equity fund for long-term investors
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FP Carmignac Global Equity Compounders A GBP ACC

ISIN: GB00BMGLBK75
Recommended minimum investment horizon
5 years
Risk indicator*
5/7
SFDR - Fund Classification
Article -

*Risk Scale from the KIID (Key Investor Information Document). Risk 1 does not mean a risk-free investment. This indicator 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.
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.
Discretionary Management: Anticipations of financial market changes made by the Management Company have a direct effect on the Fund's performance, which depends on the stocks selected.
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: GB00BMGLBK75
Maximum subscription fees paid to distributors
-
Redemption Fees
-
Conversion Fee
-
Ongoing Charges
0.75%
Management Fees
0.67% MAX
Performance Fees
-

Footnote

Performance

ISIN: GB00BMGLBK75
FP Carmignac Global Equity Compounders+4.2+1.1+17.6+21.0−19.0+22.6+23.0
Reference Indicator+11.3+12.8+20.8+16.8−7.8+22.9+19.8
FP Carmignac Global Equity Compounders+10.6%+4.8%+9.8%
Reference Indicator+18.3%+11.0%+14.5%

Source: Carmignac at 30 Oct 2026.
Date of 1st NAV : 15/05/2020.
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 World NR index

Share

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.