Carmignac Portfolio EM Debt

• In the United States, GDP growth was revised downwards 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.
• In the eurozone, the European Central Bank lowered its key rate as expected by 25 basis points to 2.0%, but Christine Lagarde adopted a more restrictive tone regarding the inflation outlook.
• Tensions in the Middle East initially pushed oil prices above $80/barrel 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 United States, the 10-year rate eased by 17 basis points, benefiting from less robust economic data, while its German counterpart rose by 11 basis points.
• EM external debt performed well over the month, while local debt was flat.
• On the currency front, the dollar continued to weaken against the euro, reaching its lowest level since 2021, mainly due to asset repatriation amid uncertainty over the impact of the trade war. In this environment, emerging market 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, in line with its benchmark.• On local bond side, the easing of interest rates in the United States, Turkey and Colombia benefited our positions in the local debt of these countries.
• Our selection of corporate bonds in our preferred sectors, such as finance and energy, as well as our selection of emerging market debt denominated in hard currencies, made a positive contribution, as did our positions in Ecuador, Ivory Coast and Egypt. However, this was slightly offset by the protections we put in place to reduce our exposure to this market amid tightening credit spreads.
• Finally, in currencies, despite the positive contribution of our exposure to the Brazilian real and Hungarian forint, the portfolio was impacted by our exposure, albeit limited to the US dollar and Chilean peso.

• In an environment marked by uncertainty stemming from 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 relatively high level of modified duration, at around 5.5.• 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 to external debt in Hungary, Romania and Ivory Coast, which offer attractive spreads given their fundamentals. However, we remain cautious due to relatively high valuations and are maintaining a high level of hedging on the iTraxx Xover to protect the portfolio from the risk of widening spreads.
• 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 Chilean peso) and commodity-linked currencies.