Carmignac Portfolio Emerging Patrimoine

• Emerging market assets rose during a month marked by tensions in the Middle East.• In the US, GDP growth was revised down to -0.5% in the first quarter, while leading indicators gave mixed signals: PMI indices surprised on the upside, but consumer confidence and household income declined, while core inflation came in higher than expected at +2.7%.
• The Federal Reserve kept its key rates in the 4.25% to 4.50% range while delivering a less accommodative message than expected by lowering its growth outlook and raising its inflation forecasts.
• Tensions in the Middle East initially pushed oil prices above $80/bbl before falling by more than 10% after the announcement of a ceasefire, also contributing to a tightening of credit spreads of -18 bp on the Itraxx Xover index.
• Interest rates moved in different directions in June. In the US, the 10-year rate eased by 17bp, benefiting from weaker economic data, while its German counterpart rose by 11bp. Emerging market external debt performed well over the month, while local debt was flat.
• Emerging market equities rose, driven in particular by the rebound in South Korean markets in the wake of the election of the Democratic Party and President JM Lee, with his promises favorable to financial markets.
• On the currency front, the dollar continued to fall against the euro, reaching its lowest level since 2021, mainly due to the repatriation of assets amid uncertainty about the impact of the trade war. Against this backdrop, EM currencies suffered against the strength of the euro, although the Brazilian real and Eastern European currencies (the Hungarian forint, Czech koruna and Polish zloty) bucked the trend.

• During the month, the fund delivered a positive performance, outperforming its reference indicator.• On the fixed income side, the easing of interest rates in Turkey and Indonesia benefited our positions in these countries' local debt.
• Our selection of EM debt denominated in hard currencies made a positive contribution, with the appreciation of our positions in Ecuador, Côte d'Ivoire and Egypt. However, this was slightly offset by the protections we put in place to reduce our credit exposure amid tightening credit spreads.
• On the equities side, we benefited from the excellent performance of our Taiwanese (TMSC) and South Korean (SK Hynix) investments.
• Finally, in currencies, despite the positive contribution of our exposure to the Brazilian real and the Taiwanese dollar, the portfolio was impacted by our exposure, albeit limited, to the US dollar and the Chilean peso.

• In an environment marked by uncertainty caused by the introduction of tariffs, geopolitical conflicts and the risk of fiscal slippage in certain countries, we expect the major central banks in developed and emerging countries to maintain an accommodative stance. We are therefore maintaining a moderate level of modified duration, between 3.5 and 4.• With regard to local debt, we remain selective and have positions on rates in countries benefiting from high real rates, such as South Africa and Brazil, but also in certain Eastern European countries (Poland and Hungary). Over the month, we initiated positions on Turkish local rates, which offer some of the highest real rates among the main emerging countries.
• In credit, we are maintaining significant exposure, particularly to the external debt of Hungary, Romania, and Côte d'Ivoire, which offer attractive spreads given their fundamentals. However, we remain cautious due to relatively high valuations and are maintaining a significant level of hedging on the iTraxx Xover to protect the portfolio from the risk of widening spreads.
• In equities, we made adjustments to the portfolio. We took advantage of the rebound in South Korean markets to close our position in Samsung Electronics and instead strengthen our stake in SK Hynix, the world leader in innovative memory products (HBM products). We also took advantage of the weakness of Indonesian markets in recent months to initiate a position in Bank Central Asia (BCA), the leading private bank in Indonesia, where bank penetration is very low compared with other Asian countries.
• Finally, in terms of currencies, we are maintaining relatively low exposure to the US dollar and limited exposure to emerging market currencies. Our currency selection includes Latin American currencies (the Brazilian real and the Chilean peso) and commodity-linked currencies.