Carmignac Portfolio Grande Europe: Letter from the Fund Manager - Q2 2026
![[Management Team] [Author] Denham Mark](https://carmignac.imgix.net/uploads/NextImage/0001/18/%5BManagement-Team%5D-Denham-Mark.png?auto=format%2Ccompress&fit=fill&w=3840)
During the second quarter of 2026, Carmignac Portfolio Grande Europe (F share class) posted a positive return of +12.46%, above its reference indicator which was up +11.80%.
Market environment
European equity markets built on their strong start to the year during the second quarter of 2026, supported by improving macroeconomic data, resilient corporate earnings and growing confidence in the region's economic outlook. Better-than-expected retail sales, stronger business activity and signs of stabilising industrial production helped ease recession concerns, encouraging investors to broaden their exposure beyond the narrow market leadership that had characterised recent years. While the European Central Bank raised interest rates by 25 basis points to reinforce its commitment to price stability as inflation remained above target, markets largely interpreted the move as consistent with a resilient economic backdrop rather than a threat to growth.
Beneath the headline market performance, leadership continued to evolve. Investors increasingly favoured companies offering structural growth, pricing power and clear self-help opportunities over businesses solely benefiting from cyclical momentum. Sectors such as industrials, financials and selected areas of healthcare and technology continued to perform well, while interest also broadened towards companies undergoing strategic transformation, operational restructuring or expanding into attractive new markets. This shift reflected a growing emphasis on business quality and long-term earnings durability rather than purely macro-driven positioning.
From a fundamental perspective, the earnings season reinforced confidence in European corporates. Although performance remained differentiated across sectors, many companies demonstrated resilient demand, disciplined cost management and healthy pricing power despite a still uncertain global environment. The combination of attractive relative valuations, improving earnings momentum and a more constructive economic backdrop continued to strengthen the investment case for European equities, particularly for high-quality businesses capable of delivering sustainable growth through changing market conditions.
Performance review
Market conditions remained highly fragmented during the quarter, with European equities repeatedly oscillating between optimism over a de-escalation of Middle East tensions and concerns around energy prices, inflation and the broader economic consequences of the conflict. While periods of ceasefire optimism and falling oil prices supported risk appetite, Europe frequently struggled to keep pace with the powerful Artificial Intelligence (AI)driven rally in US markets. Leadership rotated rapidly throughout the period, with Banks, Industrials and AI related beneficiaries periodically outperforming before giving way to more defensive areas such as Healthcare, Telecoms and Consumer Staples. Against this backdrop, market moves were often driven more by sector rotations and changing sentiment than by company-specific fundamentals. Throughout the quarter, we increasingly identified opportunities where high-quality defensive growth franchises appeared oversold relative to their underlying business performance, while remaining disciplined in trimming positions that had become beneficiaries of momentum-driven AI enthusiasm.
Healthcare was the largest source of negative contribution during the quarter despite generally resilient operational performance across the sector. Several holdings delivered encouraging business updates but suffered from continued valuation compression as investors favoured AI-related beneficiaries and more cyclical parts of the market. EssilorLuxottica was a notable detractor despite reporting 11% organic sales growth, with concerns surrounding shareholder structure changes and competitive dynamics around smart glasses weighing on sentiment. Alcon also detracted following a mixed quarterly update, as investors focused on weaker implantable growth despite improvements to full-year expectations. AstraZeneca experienced periods of significant weakness, particularly following negative pipeline developments late in the quarter. Nevertheless, conviction in the sector remained high and portfolio activity consistently reflected this view, with additions made to AstraZeneca, Argenx, EssilorLuxottica, Genmab and other healthcare holdings as valuations became increasingly attractive. The quarter reinforced our view that many defensive growth businesses remain fundamentally sound despite being overlooked by a market increasingly focused on AI-related themes.
Within Information Technology, performance was shaped by sharp swings in investor enthusiasm surrounding AI. European AI beneficiaries such as ASML, Prysmian and, later in the quarter, ASM International benefited from ongoing enthusiasm around hyperscaler capital expenditure and AI infrastructure spending. However, leadership within the sector proved highly unstable. Software companies including SAP and Nemetschek periodically came under pressure despite delivering broadly solid operational performances, as investors questioned how AI could alter future competitive dynamics and software pricing models. At various points during the quarter, markets rotated abruptly between perceived AI winners and AI losers, creating significant dislocations in valuation. We therefore maintained a disciplined approach, selectively trimming positions such as ASML and Prysmian after strong runs while adding exposure to high-quality franchises where market reactions appeared disconnected from fundamentals. Towards quarter-end, concerns surrounding AI spending sustainability and semiconductor demand drove renewed volatility across global technology markets.
Industrials delivered a mixed but ultimately constructive contribution. Companies exposed to electrification, automation and AI-related infrastructure spending continued to benefit from strong demand trends, with Prysmian and Schneider Electric among the notable winners during the quarter. Given their strong share price performance and increasing correlation with AI sentiment, positions were progressively reduced into strength. Elsewhere, we continued to take a longer-term view where fundamentals remained intact despite weaker share price performance. Kion remained a challenged holding, while a new position in Interpump Group was established following a significant correction. More broadly, capital allocation reflected a consistent effort to recycle gains from momentum-driven winners into businesses where valuation opportunities had become more compelling.
Financials were generally supportive of performance and remained an important source of opportunity throughout the quarter. The portfolio increased exposure to several banking holdings, including BBVA, Erste Bank, National Bank of Greece and selectively UBS, where earnings delivery and underlying fundamentals continued to compare favourably with market expectations. Fineco and FlatexDegiro were also accumulated opportunistically when periods of market weakness created more attractive entry points. At the same time, positions such as UBS, Nordnet and other strong performers were selectively trimmed as valuation upside became more limited. Corporate updates from Euronext, UBS, Fineco and other holdings remained broadly encouraging and reinforced conviction in the sector despite an increasingly uncertain macroeconomic backdrop.
What is our outlook for the coming months?
Looking ahead, we continue to see a market driven by changing narratives around geopolitics, energy prices and AI rather than by underlying company fundamentals. While a sustained ceasefire in the Middle East and lower energy prices could provide support for European equities, the macroeconomic backdrop remains uncertain and earnings expectations appear demanding in parts of the market. In this environment, we believe selectivity and a disciplined focus on business quality, valuation and long-term earnings power will remain critical.
At the same time, many of the high-quality defensive growth companies that form the core of the portfolio remain materially out of favour. This broad derating has occurred despite generally resilient operational performance, creating what we believe are increasingly attractive opportunities for long-term investors. Consequently, we have continued to add selectively to holdings where share prices appear disconnected from underlying fundamentals, particularly within healthcare and other defensive growth areas.
The market's continued focus on AI is creating both opportunities and risks. While we remain constructive on select beneficiaries of AI-related investment, we have continued to trim positions where valuations have become stretched, while increasing exposure to businesses where concerns around AI disruption appear overdone. We believe this widening dispersion in valuations is creating an attractive opportunity set for active stock pickers focused on long-term fundamentals rather than short-term narratives.
We maintain our exclusive focus on companies demonstrating high sustainable profitability, strong reinvestment opportunities and leading sustainability standards, as we believe these businesses are best placed to deliver consistent long-term earnings growth. Recent market volatility has allowed us to increase exposure to several such companies at more attractive valuations, positioning the portfolio to benefit as the gap between share prices and underlying business fundamentals ultimately narrows.
Source: Carmignac, Bloomberg, 30/06/2026
Carmignac Portfolio Grande Europe
Carmignac Portfolio Grande Europe F EUR Acc
- 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
Fees
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- We do not charge an exit fee for this product.
- Management fees and other administrative or operating costs
- 1.17% 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
- 0.58% 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 Grande Europe | +0.9 | −0.2 | +12.0 | +15.5 | −20.6 | +22.5 | +14.4 | +35.5 | −9.6 | +11.0 |
| Reference Indicator | +10.7 | +19.4 | +8.8 | +15.8 | −10.6 | +24.9 | −2.0 | +26.8 | −10.8 | +10.6 |
| Carmignac Portfolio Grande Europe | +4.8% | +2.5% | +8.2% |
| Reference Indicator | +14.5% | +10.0% | +9.7% |
Source: Carmignac at Jun 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.
Reference Indicator: MSCI Europe NR index
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