Carmignac

Carmignac Portfolio Grandchildren: Letter from the Fund Manager

  • -12.3%
    Carmignac Portfolio Grandchildren performance

    in the 2nd quarter of 2022 for the A EUR Acc share class

  • -10.8%
    Reference indicator’s performance

    in the 2nd quarter of 2022

  • +38.2%
    Performance of the Fund

    since launch1 versus +39.2% for the reference indicator

During the second quarter of 2022, Carmignac Portfolio Grandchildren (A EUR Acc share class) declined -12.3%, providing a return below its reference indicator which fell -10.8% over the same period.

Global Markets

In the second quarter, little has changed, and global markets continued to reflect the themes that drove returns in the previous three months of the year. More precisely, concerns over rising interest rates led to persistent downward pressure on the valuations of relatively highly rated stocks despite the underlying quality of such companies. This dynamic was exacerbated, as the quarter proceeded, by growing concerns over the impact of rising interest rates and the energy crisis on both future economic and corporate profit growth.

Portfolio Management

As a result, Technology and Industrial stocks – where we have high weightings – continued to be under pressure and, despite our Consumer Staples and Healthcare names holding up well, this backdrop led to the Fund lagging its reference indicator in the period.

Among the weakest names were Semiconductor leaders Nvidia and ASML. While Nvidia delivered solid fiscal Q1 results, they expect consumer related demand for their graphics chips (GPUs) to be impacted in the second quarter due to Chinese lockdowns and the Ukrainian war. Looking far ahead, we remain positive about the prospects of its leading technology exposure to megatrends such as datacentre’s growth and artificial intelligence. It’s the same long-term horizon for ASML, a name which recently we have slowly been adding to. The company, in fact, has a dominant position in lithography within the semiconductor manufacturing chain and has a large order backlog for their machines driven by increased penetration of the latest cutting edge EUV technology, both factors substantiating our investment thesis.

In the period, Kingspan had the worst performance among our Industrial names. While delivering a strong Q1 report, the insulation material company announced recent declines in order activity. Contrary to what we usually do when there is weakness in a name for which we have strong conviction, we have not taken the opportunity to increase exposure here. It is true that we remain committed to Kingspan on the back of better building insulation standards and regulation, and the widespread desire for energy efficient buildings but, the Fund’s macroeconomic overlay – a unique characteristic of the strategy – has guided us to reduce cyclicality in recent months. Furthermore, we have sold other more cyclical names such as Netflix, PayPal, and Walt Disney, but added holdings among the Consumer Staples such as Colgate-Palmolive and Procter & Gamble. This area of the market is characterised by resilient demand as consumers redirect spending to essentials in difficult economic environments. Additionally, on the back of the companies’ strength and desirability of brands, they are in good position to pass on to consumers cost increases of raw materials.

On the positive side, most of our names have delivered resilient fundamental results up to now. Examples include core stalwarts like Microsoft, Palo Alto and Intuit. The latter even increased full year guidance driven by their core small business accounting software suite.

Our Healthcare stocks have seen mixed fortunes recently. On the one side, Novo Nordisk continues to rise driven by accelerating demand for its diabetes and obesity drugs, Thermo Fisher has been rewarded on the back of its relative stability and visibility of core revenue, and Elevance Health (formerly known as Anthem), the US healthcare medical insurance company, gained value thanks to announced costs control measures. On the negative side, Intuitive Surgical and Stryker fell due to concerns over the strength of future hospital spending, as well as supply chain constraints. Align Technology (owner of the Invisalign brand) significantly fell on the slowing down of growth expectations. Nevertheless, we remain committed to these names and have added to them.

Further name of note is EA Sports, one of the better contributors in Q1 which we sold on strength as we see its industry vulnerable in a downturn. Conversely, we added ServiceNow – a player in the software sector – on weakness, as we are optimistic on the sustainability of the growth of their automated workflow management tool which has become an essential corporate application post-pandemic

Outlook

Other than the above-mentioned changes, activity has been contained. As one would expect from an investment process that focuses entirely on businesses that have proven ability to sustain high levels of profitability, most of our holdings have not disappointed to date. Our focus remains on identifying and owning profitable companies with high return on capital. These companies, we believe, are in a good position to deliver results over a five year or longer time horizon.

Source: Company website, Bloomberg, Carmignac, June 2022 1: 31/05/2019

Carmignac Portfolio Grandchildren

A global, high-conviction equity fund for long-term investors

Discover the fund page

Carmignac Portfolio Grandchildren A EUR Acc

ISIN: LU1966631001

Recommended minimum investment horizon

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Main risk of the Fund

EQUITY: The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization.

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.

DISCRETIONARY MANAGEMENT: Anticipations of financial market changes made by the Management Company have a direct effect on the Fund's performance, which depends on the stocks selected.

The Fund presents a risk of loss of capital.

Carmignac Portfolio Grandchildren A EUR Acc

ISIN: LU1966631001
2017 2018 2019 2020 2021 2022 (YTD)
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Year to date
Carmignac Portfolio Grandchildren A EUR Acc - - +15.47 % +20.28 % +28.38 % -13.74 %
Reference Indicator - - +15.49 % +6.33 % +31.07 % -4.30 %

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3 years 5 years 10 years
Carmignac Portfolio Grandchildren A EUR Acc +12.76 % - -
Reference Indicator +12.85 % - -

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Source : Carmignac at 29/07/2022

Maximum subscription fees paid to distributors : 4,00%
Redemption fees : 0,00%
Ongoing Charges : 1.7000000
Conversion Fee : 1
Management fees : 1,40%
Performance fees : 20,00%

Marketing communication. Please refer to the KIID/prospectus of the fund before making any final investment decisions. ​​This document is intended for professional clients.

This material may not be reproduced, in whole or in part, without prior authorisation from the Management Company. This material does not constitute a subscription offer, nor does it constitute investment advice. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. This material has been provided to you for informational purposes only and may not be relied upon by you in evaluating the merits of investing in any securities or interests referred to herein or for any other purposes. The information contained in this material may be partial information and may be modified without prior notice. They are expressed as of the date of writing and are derived from proprietary and non-proprietary sources deemed by Carmignac to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Carmignac, its officers, employees or agents.​

Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor).​ The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency-hedged.​

Reference to certain securities and financial instruments is for illustrative purposes to highlight stocks that are or have been included in the portfolios of funds in the Carmignac range. This is not intended to promote direct investment in those instruments, nor does it constitute investment advice. The Management Company is not subject to prohibition on trading in these instruments prior to issuing any communication. The portfolios of Carmignac funds may change without previous notice. The reference to a ranking or prize, is no guarantee of the future results of the UCIS or the manager.​

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The Funds’ prospectus, KIIDs, NAV and annual reports are available at www.carmignac.com, or upon request to the Management​ Carmignac Portfolio refers to the sub-funds of Carmignac Portfolio SICAV, an investment company under Luxembourg law, conforming to the UCITS Directive.​ The French investment funds (fonds communs de placement or FCP) are common funds in contractual form conforming to the UCITS or AIFM Directive under French law

  • UK: This document was prepared by Carmignac Gestion and/or Carmignac Gestion Luxembourg and is being distributed in the UK by Carmignac Gestion Luxembourg UK Branch (Registered in England and Wales with number FC031103, CSSF agreement of 10/06/2013).​ ​FP Carmignac ICVC (the “Company”) is an Investment Company with variable capital incorporated in England and Wales under registered number 839620 and is authorised by the Financial Conduct Authority (the “FCA”) with effect from 4 April 2019 and launched on 15 May 2019. FundRock Partners Limited is the Authorised Corporate Director (the “ACD”) of the Company and is authorised and regulated by the FCA. Registered Office: Second Floor, 52-54 Gracechurch Street, London EC3V 0EH, UK; Registered in England and Wales with number 4162989. Carmignac Gestion Luxembourg SA, UK Branch (Registered in England and Wales with number FC031103, CSSF agreement of 10/06/2013) has been appointed as the Investment Manager and distributor in respect of the Company.

  • In Switzerland: the prospectus, KIIDs and annual report are available at www.carmignac.ch, or through our representative in Switzerland, CACEIS (Switzerland), S.A., Route de Signy 35, CH-1260 Nyon. The paying agent is CACEIS Bank, Paris, succursale de Nyon/Suisse, Route de Signy 35, 1260 Nyon.

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