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Carmignac Portfolio Grandchildren: Letter from the Fund Managers - Q2 2025

Author(s)
Mark DENHAM,Obe EJIKEME
Published on
July 14, 2025
Read time
3 minute(s) read
+2.44%
Performance of the Fund in the Q2 2025 (A EUR Share class).
+2.58%
Performance of its reference indicator1 in Q2 2025.
+11.32%
Annualized performance of the Fund since launch (31/05/2019) vs +12.54% for its reference indicator.

Carmignac Portfolio Grandchildren A EUR Acc delivered a performance of +2.44% in the second quarter of 2025, slightly underperforming its reference indicator, which had a performance of +2.58%.

Market environment during the period

The second quarter of 2025 was marked by sharp volatility across developed markets as investors navigated escalating tariff tensions and geopolitical concerns in the Middle East. Markets opened the quarter on a sour note with the US administration’s unexpected "Liberation Day" tariff announcement on April 2, which sparked a significant correction. The scale of the proposed measures led to a sharp selloff in both equities and bonds. However, the subsequent decision to suspend most of the new tariffs for 90 days—excluding those on China—quickly reassured markets. This policy reversal, combined with ongoing strength in hard economic data, set the stage for a strong rebound.

Developed market equities posted robust gains over the quarter, driven largely by renewed investor confidence and a solid earnings season. The US led the recovery, with large-cap technology names—particularly the ‘Magnificent 7’—powering growth stock outperformance. European equities, by contrast, delivered more moderate gains, especially when compared to the strength of the first quarter, but still attracted meaningful inflows from global investors seeking to rebalance portfolios away from concentrated US exposures.

How did we fare in this context?

During the second quarter of 2025, the fund slightly underperformed its reference indicator. The Information Technology and Communication Services sectors—primarily composed of large-cap technology companies—together represent approximately 34% of the benchmark. Although the fund maintained an underweight position in these sectors, by about 6–8% relative to the benchmark, our disciplined stock selection delivered strong results, as a result, this allocation was a net positive contributor to overall performance.

Microsoft, our largest holding at 9% of the portfolio, led the way with a +22% gain and was the fund’s top contributor. The company’s Q1 results reinforced the substantial long-term potential of artificial intelligence (AI). Azure, Microsoft’s hyperscaler business, saw revenue growth accelerate to 35%, with AI-related demand accounting for roughly half of this growth.

Nvidia also posted strong performance, rising 33% as continued demand for AI infrastructure supported its leadership in the sector. However, the standout performer this quarter was Oracle, whose shares surged 44%. This was driven by upbeat quarterly results and forward-looking guidance highlighting an expected 70% revenue growth next year in its hyperscaler unit, Oracle Cloud Infrastructure (OCI), following 50% growth in the past year.

Healthcare remained one of the weaker segments of the market during the second quarter, which weighed on our performance given the fund’s sizeable exposure to the sector. Investor sentiment was dampened by repeated statements from the U.S. administration indicating its intent to control healthcare costs—primarily through drug price regulation—and by proposed budget cuts to publicly funded research institutions such as the NIH. These developments have introduced a high degree of uncertainty across the sector.

The most impacted sub-sector has been Life Sciences tools and equipment providers, particularly those linked to research and development (R&D). Companies like Thermo Fisher and Danaher, which supply essential equipment for R&D processes, came under significant pressure. Thermo Fisher, for instance, saw its share price decline by 24% during the period. Despite these headwinds, we have retained our positions in these names. We believe the risks are now largely priced in, and we expect a near-term rebound in manufacturing-related revenues, particularly driven by a recovery in demand for bioprocessing equipment.

Vertex Pharmaceuticals, a biopharma name in the portfolio, declined 15% on concerns around potential U.S. drug price controls and new tariff risks on imported medicines. However, we viewed the pullback as a buying opportunity. Vertex specializes in niche therapies, where pricing pressure is likely to be limited, and it benefits from U.S.-based manufacturing, which mitigates trade-related risks.

Outlook & positioning

In the months ahead, one of the most pivotal macro considerations remains the potential implementation of new tariffs following the delay. The outcome and magnitude of any such measures continue to cast a cloud of uncertainty over global markets and are weighing on investor sentiment.

We made several adjustments to the portfolio during the quarter. In Healthcare, we increased our positions in McKesson and Cencora—two leading pharmaceutical distributors that benefit from the structural growth in drug volumes, supported by demographic shifts and broader access to healthcare. These additions were funded by a reduction in our holding in Intuitive Surgical, where the valuation—now approaching 70 times this year’s earnings—appears to fully reflect its growth potential.

In Financials, while many balance sheet-driven institutions still fall short of our fundamental and sustainability criteria, UBS has emerged as a notable exception. The bank has made meaningful progress in integrating Credit Suisse, and recent regulatory clarity from the Swiss government regarding capital requirements has reduced uncertainty. This has allowed investors to refocus on UBS’s core strength—its global wealth management franchise—which remains attractively valued relative to peers.

Although our portfolio has limited direct exposure to companies significantly impacted by tariff changes, we remain attentive to the broader economic implications. In this environment, we continue to prioritize high-quality, secular growth companies with resilient earnings and strong revenue visibility. We believe these businesses are best equipped to navigate uncertainty while delivering compelling long-term returns.

Source: Carmignac, Bloomberg, data as of 30/06/2025. Performance of the A EUR Acc share class ISIN code: LU1966631001. Risk Scale from the KID (Key Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time. 1Reference indicator: MSCI World (USD, net dividends reinvested). 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).

Carmignac Portfolio Grandchildren

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Carmignac Portfolio Grandchildren A EUR Acc

ISIN: LU1966631001
Recommended minimum investment horizon
5 years
Risk indicator*
4/7
SFDR - Fund Classification**
Article 9

*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.
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.
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: LU1966631001
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
1,71% of the value of your investment per year. This estimate is based on actual costs over the past year.
Performance fees
20,00% when the share class overperforms the Reference indicator during the performance period. It will be payable also in case the share class has overperformed the reference indicator but had a negative performance. Underperformance is clawed back for 5 years. 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
0,30% 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: LU1966631001
Carmignac Portfolio Grandchildren−5,2+21,9+23,0−24,2+28,4+20,3+15,5
Reference Indicator−3,4+26,6+19,6−12,8+31,1+6,3+15,5
Carmignac Portfolio Grandchildren+11,6%+10,1%+11,3%
Reference Indicator+13,8%+13,5%+12,5%

Source: Carmignac at Jun 30, 2025.
Date of 1st NAV : 31/05/2019.
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.

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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.

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  • 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.

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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.