Carmignac Sécurité: Letter from the Fund Managers - Q3 2025
In the third quarter of 2025, Carmignac Sécurité posted a performance of +0.67%, compared with +0.28% for its reference indicator, bringing its year-to-date performance to +2.24% compared with +1.84% for its reference indicator.
Market review and portfolio allocation
The third quarter of 2025 saw resilient economic growth, despite fatigue in the US labour market, and a gradual shift in expectations regarding monetary policy.
US trade policy remained a dominant theme in Q3, with tariff implementation delayed to August before new deals were struck with the EU and Japan at 15%. Additional increases targeted Canada, copper, and pharmaceuticals, with some rates reaching 100%. While the measures sustained mild inflationary pressures, they proved less disruptive than initially feared, allowing global growth and market sentiment to remain broadly resilient through the quarter.
Another key theme in the third quarter was the gradual weakening of the US labour market, which prompted the Federal Reserve (the “Fed”) to begin its easing cycle in September. The turning point came with the July employment report, released in early August, which was much weaker than anticipated and included downward revisions of 258,000 jobs for May and June—the largest since the 2020 pandemic. The subsequent August report confirmed this softening trend, showing payroll growth of just 22,000 and a rise in the unemployment rate to 4.3%, the highest since late 2021.
Against this backdrop, the Fed adopted a more dovish stance. At Jackson Hole, Chair Powell acknowledged that the labour market was “not particularly tight and faced increasing downside risks.” Consequently, the Fed implemented its first 25bps rate cut of 2025 to a range of 4.00–4.25%, and its projections indicated the prospect of further easing before year-end.
As a result, US rates declined during the quarter, with yields on 2-year and 10-year down 11 bp and 8 bp, respectively, reflecting a shift in market focus away from inflation risks and towards labour market fragility.
In contrast, the Euro area faced renewed fiscal and political headwinds, particularly in France, where tensions around Prime Minister Bayrou’s austerity plan and the subsequent vote of confidence fuelled market volatility. The French 30-year yield rose 29 basis points during the third quarter to reach 4.35%, and even closed at a post-2009 high of 4.50% on 2 September, leading to a general upward revaluation of European sovereign yields, with the German 30-year yield rising 18 basis points to 3.28%.
Against this backdrop, the European Central Bank (the “ECB”) maintained its policy rate at 2.0%, signalling a pause after its eight consecutive cuts since mid-2024. The central bank adopted a more balanced tone, acknowledging downside growth risks but limited scope for further easing in light of fiscal uncertainty and balanced inflation risks.
Credit markets proved remarkably resilient amid volatility in sovereign yields. Supported by solid corporate fundamentals and contained default risk, spreads tightened modestly, with the iTraxx Xover index narrowing by 42bps to 262bps, reflecting investor confidence in the credit segment’s carry potential.
Performance Review
During the quarter, Carmignac Sécurité’s performance was primarily driven by its carry, which continued to provide a steady source of return. This carry stemmed mainly from the Fund’s credit allocation, stable at around 76%, concentrated in its preferred sectors — financials, energy, and CLOs — which all benefited from resilient corporate fundamentals and tighter spreads.
Duration was actively managed throughout the period, starting from a cautious level of 1.7 years amid tariff-related uncertainty and robust macro data, and gradually increased to around 2.3 years. The adjustment focused on the short end of the European curve, aiming to protect the portfolio against a potential slowdown in growth at a time when the market had largely stopped pricing in further rate cuts. While the portfolio was affected by the rise in short-term yields, it was supported by short positions on French sovereign bonds — which benefited from widening spreads — and by the Fund’s inflation strategies, particularly in the United States.
What is our outlook for the coming months?
The portfolio remains concentrated at the front end of the European curve, where carry remains attractive and the market no longer anticipates additional ECB cuts. The Fund’s overall duration stands at 2.4 years, concentrated on maturities below five years and diversified across euro rate swaps, short-dated German bonds and highly rated corporate credit.
In contrast, the Fund maintains short positions on the long end of the curve, notably through French OATs and US Treasuries, reflecting concerns over France’s fiscal trajectory and the limited credibility of the Fed’s inflation stance. The Fund also holds long positions in US inflation as protection against sticky price dynamics in an environment of persistent fiscal expansion.
The credit allocation remains significant (around 77%), focused on short-dated, investment-grade corporate bonds offering robust carry and limited exposure to market beta. This exposure is complemented by around 5% in iTraxx Xover protection, hedging potential spread widening from current tight levels, and 14–15% in money market instruments to preserve liquidity and stability.
With a Yield-to-Maturity of approximately 3.5%, Carmignac Sécurité continues to offer a solid income cushion and a first line of defence against renewed volatility. We believe, the current barbell strategy, balancing credit carry with active duration management and liquidity reserves, leaves the Fund well positioned to navigate a period of gradual monetary normalisation and lingering fiscal and political uncertainty.
Carmignac Sécurité
Carmignac Sécurité AW EUR Acc
- Recommended minimum investment horizon
- 2 years
- Risk indicator*
- 2/7
- 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
Fees
- Entry costs
- 1.00% 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
- 1.11% of the value of your investment per year. This estimate is based on actual costs over the past year.
- Performance fees
- There is no performance fee for this product.
- Transaction Cost
- 0.11% 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 Sécurité | +2.2 | +5.3 | +4.1 | −4.8 | +0.2 | +2.0 | +3.6 | −3.0 | +0.0 | +2.1 |
| Reference Indicator | +1.8 | +3.2 | +3.4 | −4.8 | −0.7 | −0.2 | +0.1 | −0.3 | −0.4 | +0.3 |
| Carmignac Sécurité | +4.6% | +1.7% | +1.2% |
| Reference Indicator | +2.6% | +0.5% | +0.2% |
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). 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: ICE BofA 1-3 Year All Euro Government index