Back to school 2023 - Carmignac P. EM Debt
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+11.36%Performance of the Fund since the beginning of the year
vs +6.12% for the reference indicator1
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+15.88%3-year performance of the Fund
vs +2.93% for the reference indicator1
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+5.25%Annualized performance of the Fund since launch (31/07/2017)
vs +0.90% for the reference indicator1
What about emerging markets ?
In EM fixed income, despite improving fundamentals yields and spread are attractive. Economic conditions remain fragile overall, but growth trends should prove more resilient relative to developed economies.
As inflation in EM has been relatively well behaved and continue to slow down, some EM banks have already started to lower their rates (Brazil, Hungary). Several are on the brink of a rate cut cycle likely to start in H2 2023, continuing well into 2024.
Signs of slowdowns in the US economy should be negative for the USD and thus help EM FX in EM regions to perform.
In China, disappointing reopening to linger. Indeed, the country is faced with a more difficult international environment due to the desire to many nations to regain industrial sovereignty and the United States to hinder Chinese development. Investors grew more pessimistic about the country’s economic outlook.
The positive trend on commodities, should also be supportive for emerging markets.
2023 Performance Contribution
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Since the beginning of the year, the portfolio has mainly benefited from its exposure to external and local sovereign debt, in the EMEA (Hungary, Czechia) and LATAM regions (Brazil).
The active management of our selection of EM currencies strongly supported the Fund's performance, mainly driven by our LATAM and EMEA positions.
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- Our exposure to local Mexican and Polish debt has so far had a negative impact on the Fund's YTD performance due to the widening of their rates.
Outlook & Positioning
We remain focused on duration with the view that a recession would force DM central banks to cut rates and thus enable further cuts in the EM world. The fund’s modified duration is now close to 636 basis points and has an average rating of BBB.
In local rates, we are ready to re-engage in countries like Brazil and Hungary, which were among the most advanced in their rate hike cycle, once the FED or ECB have paused and EM central banks can accelerate their cutting cycles.
In external debt, we continue to favour manufacturing countries that will benefit in the long term from the “nearshoring” phenomenon, i.e. the potential repatriation of production chains to closer and more stable countries (Romania, Poland, Mexico, etc.).
In FX, Although we have reduced our exposure to emerging currencies, we continue to favour a selection of currencies on a tactical/opportunist basis, such as the Brazilian real, the Mexican peso and the Thai baht. The correction on FX markets over the summer are a new source of tactical opportunities (BRL, MXN, CLP...).
Source: Bloomberg, 31/08/2023. 1Reference Indicator: JP Morgan GBI – Emerging Markets Global Diversified Composite Unhedged EUR Index. Performance of the FW EUR acc share class. Past performance is not necessarily indicative of future performance. The return may increase or decrease as a result of currency fluctuations. Performances are net of fees (excluding possible entrance fees charged by the distributor).
Carmignac Portfolio EM Debt A EUR Acc
Recommended minimum investment horizon
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EMERGING MARKETS: Operating conditions and supervision in "emerging" markets may deviate from the standards prevailing on the large international exchanges and have an impact on prices of listed instruments in which the Fund may invest.
INTEREST RATE: Interest rate risk results in a decline in the net asset value in the event of changes in interest rates.
CURRENCY: Currency risk is linked to exposure to a currency other than the Fund’s valuation currency, either through direct investment or the use of forward financial instruments.
CREDIT: Credit risk is the risk that the issuer may default.
The Fund presents a risk of loss of capital.
Carmignac Portfolio EM Debt A EUR Acc
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
2024 (YTD) ? Year to date |
|
|---|---|---|---|---|---|---|---|---|---|---|---|
| Carmignac Portfolio EM Debt A EUR Acc | - | - | - | +0.82 % | -10.45 % | +28.07 % | +9.84 % | +3.24 % | -9.37 % | +14.30 % | +4.13 % |
| Reference Indicator | - | - | - | +0.42 % | -1.48 % | +15.56 % | -5.79 % | -1.82 % | -5.90 % | +8.89 % | +5.57 % |
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| 3 Years | 5 Years | 10 Years | |
|---|---|---|---|
| Carmignac Portfolio EM Debt A EUR Acc | +2.59 % | +5.13 % | - |
| Reference Indicator | +2.42 % | +0.44 % | - |
Scroll right to see full table
Source: Carmignac at 30/09/2024
| Entry costs : | 2,00% 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 : | 1,40% 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 : | 0,57% 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. |