Carmignac Portfolio Inflation Solution: Letter from the Fund Managers - Q3 2025
Over the third quarter of the year, Carmignac Portfolio Inflation Solution delivered a performance of +2.36% compared with +0.28% for its reference indicator. Year-to-date, the fund’s performance stands at +13.50% versus +1.61% for its reference indicator.
Market environment
The third quarter saw continued disinflation in Europe, while U.S. inflation showed some difficulty in maintaining its downward trend. U.S. macroeconomic data confirmed a slight slowdown, largely due to uncertainties generated by Donald Trump’s initiatives. China’s economy continued to weaken as consumer confidence deteriorated, while Europe moved in a fragmented fashion, with Spain in Olympic shape and both Germany and France in the infirmary.
This economic backdrop translated into a generally positive market environment, supported by sluggish global growth and contained inflation. Interest rates fell slightly in the United States and rose modestly in Germany, allowing equity markets to continue their upward trajectory — in some cases quite strongly, such as in emerging markets. The euro–dollar exchange rate ended the quarter roughly where it began. Industrial commodities and fossil fuel prices declined, precious metals surged, and five-year inflation expectations ticked up slightly. On the markets, it was a “bad news is good news” or “no news is good news” atmosphere — not necessarily the best environment for a strategy aiming to benefit from rising inflation.
Performance review
Nevertheless, with a quarterly performance for the fund of +2.36% versus +0.28% for its reference indicator1, our Fund managed to stand out, thanks mainly to its strong exposure to equity markets (gross contribution of +1.6%), particularly toward the end of the period when focus shifted to emerging markets, and especially to China. Commodities were the second performance driver (+1.03% gross), led notably by gold. Inflation swaps represented the third performance contributor, adding +0.55% gross. Other asset classes (interest rate and currency markets) made marginal contributions, in both directions.
It is worth noting that, in a market environment not perceived as inflationary, certain commodities and inflation swaps (reflecting expected inflation) substantially contributed to the Fund’s performance. Carmignac Portfolio Inflation Solution was thus able to accompany traditional diversified portfolios in an environment that, on paper, was much more favourable to them than to our Fund. Since the start of the year, the Fund has risen by +13.5% versus +1.6% for its reference indicator, with a particularly contained volatility of 5.1%, underscoring its ability to withstand intermediate disinflationary phases.
Our positioning & prospects
Every decision or inclination from Donald Trump since the commencement of his second presidency has been inflationary.
In the United States, the halting of immigration, the imposition of tariffs, the desire to weaken the dollar or take control of the Fed, and fiscal support for an economy that hardly needs it — all these are inflationary forces. Prioritizing Main Street over Wall Street is inflationary. Elsewhere, forcing Germany and Europe to rearm, encouraging China to consume more and overproduce less — these too are inflationary.
The first half of 2026 will likely see tax cuts, deregulation, and restocking activity in the United States, all of which will give the economy another boost, even as the labour supply has shrunk due to the end of immigration. The early part of next year could therefore mark the beginning of a second wave of inflation.
Carmignac Portfolio Inflation Solution is already positioned for this scenario, with nearly 5 points of duration in five-year U.S. and European inflation swaps, direct or indirect exposure to commodities of around 25%, zero duration in bond markets, 30% exposure to the U.S. dollar — which will temporarily benefit from the improved growth differential in favour of the U.S. versus the rest of the world — and a proven ability to quickly shift to a negative equity exposure, currently around 45%, mostly outside the United States.
The managers of Carmignac Portfolio Inflation Solution are firmly ready for inflation’s return!
Carmignac Portfolio Inflation Solution
Carmignac Portfolio Inflation Solution I EUR Acc
- Recommended minimum investment horizon
- 5 years
- Risk indicator*
- 3/7
- SFDR - Fund Classification**
- Article 6
*Risk Scale from the KID (Key Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time. **The Sustainable Finance Disclosure Regulation (SFDR) 2019/2088 is a European regulation that requires asset managers to classify their funds as either 'Article 8' funds, which promote environmental and social characteristics, 'Article 9' funds, which make sustainable investments with measurable objectives, or 'Article 6' funds, which do not necessarily have a sustainability objective. For more information please refer to https://eur-lex.europa.eu/eli/reg/2019/2088/oj.
Main risks of the fund
Fees
- Entry costs
- We do not charge an entry fee.
- Exit costs
- We do not charge an exit fee for this product.
- Management fees and other administrative or operating costs
- 1.08% 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
- 0.07% 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
| Carmignac Portfolio Inflation Solution | -0.1 | 3.2 | 13.5 |
| Reference Indicator | 0.0 | 1.9 | 1.6 |
| Carmignac Portfolio Inflation Solution | + 12.2 % | - | + 9.2 % |
| Reference Indicator | + 2.0 % | - | + 2.0 % |
Source: Carmignac at Sep 30, 2025.
Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor).
Reference Indicator: Eurostat Euro HICP ex tobacco index (interpolated into a daily quote)
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