Carmignac

Carmignac Portfolio Grande Europe: Letter from the Fund Manager

  • -13.8%
    Carmignac Portfolio Grande Europe performance

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

  • -9.5%
    Reference indicator’s performance

    in the 2nd quarter of 2022

  • -24.6%
    Performance of the Fund year to date

    versus -15.0% for the reference indicator

During the second quarter of 2022, Carmignac Portfolio Grande Europe (A EUR Acc share class) declined -13.8%, providing a return below its reference indicator which fell -9.5%.

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European Equity Market

Little has changed in the last three months: Q2 began in the same vein as Q1 ended, with markets juggling many concerns. On the one side, concerns about the impact of rising interest rates worldwide on stock price valuations and, on the other, concerns about disruption to companies and the economy from ongoing lockdowns in China and the war in Ukraine. The latter, which persistently fueled high energy and raw material prices, also placed additional burdens on companies and consumers. As the quarter developed, we saw a shift from valuation multiple compression due to rising rates, to growing fear over the impact of rising costs on economies and companies’ profits. Both dynamics had a detrimental effect on stock prices however, this transition, was the key factor affecting sectoral performance during the period. Cyclical/economically sensitive sectors such as Autos and Commodities – which had been more favourable in the previous quarter – dragged down the market and joined the already weak Construction, Industrials, and Technology names. Overall, the most resilient areas were all defensive including Telecommunications, Utilities, Consumer Staples, and Healthcare. The Energy sector was the exception, as it was sustained by the ongoing crisis with Russia.

Portfolio Management

By continuously assessing our portfolio, we see that this feared deterioration in company profits has yet to materialise among our companies, which have, by and large, delivered solid Q1 results and maintained full year targets. The exceptions were Vestas Wind Systems and GN Store Nord, names which have been the most affected by global supply chain disruptions over recent quarters and had to lower their 2022 expectations. For the wider market, analysts’ expectations for the year’s profit growth remain decent at low double digits. However, this looks optimistic as we expect declining economic growth to impact sales and persistent cost pressure to eventually eat into profit margins. Nevertheless, to date, our names have managed to pass cost pressure on through higher prices.

At this point, the question is: are future problems already discounted in the severe stock price decline seen in some of the most sensitive areas of the market? We suspect they are not. This view is supported by what happened to Kingspan’s stock price. Once the insulation material company announced that order volumes for their insulated panels used in commercial construction declined in May and June versus the same period last year, the stock fell more than 15% despite having already fallen ca 35% year to date. Investors are on the lookout for any news and ready to significantly penalise the negatives in an environment which has been detrimental to our Industrial stocks, namely Kingspan (insulation), Schneider (electricals), Sika (building materials), and Assa Abloy (locks). Still, we maintain these as core holdings as their investment thesis over the long-term holds up.

Although we have a large exposure to Health Care, it was not enough to offset the declines among our Industrial and Technology names in the period but, the underlying names have recorded good performance led by Novo Nordisk - our largest holding. Novo rose in Q2 driven by accelerating prescription growth of its key diabetes drug Ozempic as the so-called GLP-1 drug class continues to dominate and increase its share in treating the illness. Additionally, support came by the news that a manufacturing issue relating to a recently approved obesity product, Wegovy, is now resolved, and supply is set to resume in the second half of. This indication is a major part of our investment thesis as obesity is at least twice as prevalent as diabetes – according to the World Health Organization – and one where the use of successful drug treatments like Wegovy has only just started. Argenx, another name in the Health Care sector, was the best performer in the Fund over the period as the roll out of recently approved Vyvgart for the treatment of the rare disease Myasthenia Gravis exceeded analysts’ expectations. This result underpinned the company’s successful transition towards profitability and cash generation. We remain committed to both names.

Outlook

As active managers, we have used the dramatic pullbacks in stock prices seen in the previous months, to add new names to the Fund. With an investment horizon of more than five years, we have the confidence to bet against the market and seize opportunities. Earlier in the year we added biotech Genmab and dental implant firm Straumann. In Q2 we continued to increase Genmab in size and added Alcon, producer of eye care products ranging from surgically implanted artificial lenses to contact lenses. The name delivers the reliable steady growth we are looking for in this environment, driven by favourable trends of ageing demographics, better diagnosis, and innovation.

The Fund structure remains unchanged. The recent environment has been a difficult one for us, in absolute terms, and relative to our reference indicator. However, as fears over economic growth continue, we expect the sound nature and visibility of our more high-quality stocks to be supportive to the Fund’s performance. In any event, the portfolio is a consequence of our bottom-up stock picking process which focuses on profitable companies with high return on capital. Such companies, we believe, could deliver attractive long-term returns for investors.

Source: Company website, Bloomberg, Carmignac, June 2022

Carmignac Portfolio Grande Europe

A high conviction, sustainable European equity strategy

Discover the fund page

Carmignac Portfolio Grande Europe A EUR Acc

ISIN: LU0099161993

Recommended minimum investment horizon

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Main risks 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 Grande Europe A EUR Acc

ISIN: LU0099161993
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (YTD)
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Year to date
Carmignac Portfolio Grande Europe A EUR Acc +17.90 % +8.56 % +10.32 % -1.40 % +5.11 % +10.36 % -9.56 % +34.79 % +14.46 % +21.73 % -16.18 %
Reference Indicator +14.37 % +20.79 % +7.20 % +9.60 % +1.73 % +10.58 % -10.77 % +26.82 % -1.99 % +24.91 % -8.39 %

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3 years 5 years 10 years
Carmignac Portfolio Grande Europe A EUR Acc +9.21 % +7.75 % +7.29 %
Reference Indicator +6.79 % +5.64 % +8.05 %

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Source : Carmignac at 29/07/2022

Maximum subscription fees paid to distributors : 4,00%
Redemption fees : 0,00%
Ongoing Charges : 1.8000000
Conversion Fee : 1
Management fees : 1,50%
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.

The Management Company can cease promotion in your country anytime. Investors have access to a summary of their rights in English on the following links: UK ; Switzerland ; France ; Luxembourg ; Sweden