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Carmignac Patrimoine: Letter from the Fund Managers

Author(s)
Christophe MOULIN,Jacques HIRSCH,Eliezer BEN ZIMRA,Guillaume RIGEADE,Kristofer BARRETT
Published on
April 15, 2024
Read time
3 minute(s) read
+5.51%
Carmignac Patrimoine’s performance in the 1st quarter of 2024 for the A EUR Share class.
+4.13%
Reference indicator’s performance in the 1st quarter of 2024.
1st
quartile performance over the quarter versus peers*.

Over the 1st quarter of 2024, Carmignac Patrimoine posted a performance of +5.51%, outperforming its performance indicator (+4.13%)1.

Market environment during the period

The beginning of the year was marked by both resilient economic data in the United States and stickier inflation, which led central banks and the markets to expect fewer interest rate cuts in 2024 than at the start of the year. While equity markets welcomed this better-than-expected macroeconomic backdrop, bond markets were nervous.

The S&P 500 recorded its best start to the year since 2019. The ‘Magnificent 7’ accounted for 40% of the index’s increases. However, as the quarter drew to a close, there was a broader market participation, leading to more diversified performance sources. This was especially noticeable with the involvement of cyclical sectors, indicating a more robust bullish trend.

On the bond markets, interest rates rose, with European sovereign bonds outperforming their US counterparts. This discrepancy can be explained by less favourable macroeconomic data in Europe, which also caused a depreciation of the euro versus the dollar. Meanwhile, similar to equities, credit markets benefited from supportive macroeconomic conditions over the quarter.

Performance review

During the quarter, the fund was able to capture the rise in the markets thanks to its exposure to riskier assets (equities and credit).

Our stock selection was the main contributor to performance through our two long-term investment themes: artificial intelligence (AI) and obesity/diabetes treatments in the healthcare sector.

AI chip giant, Nvidia was the portfolio's best performer. Although we remain confident in the company's future profitability, we took advantage of the surge in the share price to take some profits. Meta also posted a strong rebound, benefiting from the positive effects of its cost-cutting program and the impact of AI on its advertising business. Outside the technology sector, Eli Lilly and Novo Nordisk continue to benefit from their duopoly position in weight-loss drugs.

Our investment in the corporate bond market was positively impacted by a substantial carry combined with narrower credit spreads. All credit segments, including European Investment Grade bonds, high-yield corporate bonds in emerging countries, and CLOs, contributed to the fund’s overall performance.

However, in this environment characterised by an extremely concentrated rebound in the equity markets, our macro-overlay, which consists of hedges on equity and credit indices as well as exposure to commodities, slightly detracted from the Fund's performance. The purpose of this component is to mitigate potential losses during market downturns and to add diversification to our equity portfolio.

Outlook and positioning

The US economy should continue to outperform the rest of the world. Indeed, we expect economic growth to remain resilient in the first half of the year, before a soft landing in the second half. At the same time, the disinflationary trend is bottoming out and inflation risks appear on the rise. In Europe, on the other hand, growth remains weak, although a gradual recovery is underway thanks to a slight upturn in manufacturing and an improvement in real income due to a combination of higher wages and lower inflation. Indeed, two years of economic stagnation have taken their toll on cyclical inflation in the eurozone. As far as the central banks are concerned, a synchronised cycle of monetary easing is underway, with a pivot by the European Central Bank and the Federal Reserve that could take place in early summer of 2024.

This environment should continue to offer a favourable cocktail for riskier assets. However, while the financial markets are not showing any signs of exuberance, this scenario has already been priced in, with most indices having reached all-time highs. Consequently, regular profit-taking and selectivity are essential. We are also strengthening laggards and diversifying our equity exposure into the industrial sector in particular. We have also put in place cheap hedges, mainly through stock and volatility index options.

Regarding our investment in the credit markets, the performance potential remains interesting through carry. On sovereign interest rates, we maintain a low modified duration. Although central banks have signalled their intention to pivot, the resilience of growth and inflation data prompts us to be cautious, particularly on the long end of the curve.

Finally, we are optimistic about commodities in the next few months, as they should gain from the gradual recovery of manufacturing. We favour the gold and copper sectors. This conviction is expressed through investments in equities, bonds, and currencies.

From 8 April 2024, Kristofer Barrett will take over the stock-picking of Carmignac Patrimoine. Kristofer will work alongside the two expert duos appointed in September 2023. Collectively, the Fund Managers are responsible for the Fund’s various performance drivers: stock selection, management of the bond portfolio and currency exposure, piloting the macroeconomic component, portfolio construction and risk management.

1Source: Carmignac at 29/03/2024. Benchmark index: 40% MSCI ACWI (USD) (net dividends reinvested) + 40% ICE BofA Global Government Index (USD) + 20% capitalised ESTER. Quarterly rebalancing.

Source: Carmignac, Morningstar. © 2024 Morningstar, Inc - All rights reserved. Carmignac Patrimoine A EUR Acc (ISIN: FR0010135103). *Morningstar category: EUR Moderate Allocation – Global. Performances are net of fees (excluding possible entrance fees charged by the distributor). Past performance is not necessarily indicative of future performance. The return may increase or decrease as a result of currency fluctuations.

Carmignac Patrimoine

A turnkey global solution to face various market conditions
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Carmignac Patrimoine A EUR Acc

ISIN: FR0010135103
Recommended minimum investment horizon
3 years
Risk indicator*
3/7
SFDR - Fund Classification**
Article 8

*Risk Scale from the KID (Key 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.
Interest Rate: Interest rate risk results in a decline in the net asset value in the event of changes in interest rates.
Credit: Credit risk is the risk that the issuer may default.
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.
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: FR0010135103
Entry costs
4,00% of the amount you pay in when entering this investment. This is the most you will be charged. Carmignac Gestion doesn't charge any entry fee. The person selling you the product will inform you of the actual charge.
Exit costs
We do not charge an exit fee for this product.
Management fees and other administrative or operating costs
1,80% of the value of your investment per year. This estimate is based on actual costs over the past year.
Performance fees
20,00% max. of the outperformance once performance since the start of the year exceeds that of the reference indicator and if no past underperformance still needs to be offset. The actual amount will vary depending on how well your investment performs. The aggregated cost estimation above includes the average over the last 5 years, or since the product creation if it is less than 5 years.
Transaction Cost
0,32% of the value of your investment per year. This is an estimate of the costs incurred when we buy and sell the investments underlying the product. The actual amount varies depending on the quantity we buy and sell.

Performance

ISIN: FR0010135103
Carmignac Patrimoine+8,2+12,1+7,1+2,2−9,4−0,9+12,4+10,5−11,3+0,1
Reference Indicator+8,2+1,1+11,4+7,7−10,3+13,3+5,2+18,2−0,1+1,5
Carmignac Patrimoine+11,1%+3,1%+3,0%
Reference Indicator+8,8%+3,8%+5,6%

Source: Carmignac at Oct 30, 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: 40% MSCI AC World NR index + 40% ICE BofA Global Government Index + 20% €STR Capitalized Index. Rebalancing Frequency: Quarterly

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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.