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Sustainable investment update

Carmignac Portfolio

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17 July 2023, Luxembourg

Notice to shareholders

1. Introduction

Dear Shareholder,

We would like to thank you for the trust you have placed in us. We are honoured to count you among the shareholders of relevant Sub-Funds of “Carmignac Portfolio” (the “Company”).

We would like to inform you that the Board of Directors is making some specific changes relating to the sustainable investment framework and investment limits, impacting certain Sub-Funds. Full details of the changes can be found below.

This document is important and requires your attention. You may be impacted only if you have invested in the below-mentioned Sub-Funds.

In case of any questions when receiving this notice, please consult your professional adviser.

2. Enhanced definition of sustainable investment for SDG framework

The different ways to define corporate sustainability and sustainable investments have received considerable attention lately but have been in development for decades. In recent years, the regulatory landscape has evolved significantly, creating a number of different definitions and implementation methods. In the absence of an industry-standard approach, each asset manager is expected to determine its own framework.

Against this backdrop, and in line with our approach to continuously monitor our positioning, we have conducted a review of our sustainable investment architecture. This assessment has been undertaken with the aim of prioritising sustainable outcomes and in line with our commitment to invest in securities that support the transition to a more sustainable economy.

For the following Sub-Funds, Carmignac already adopts a rules-based outcomes framework using the United Nations Sustainable Development Goals (“SDGs”) to determine whether a security is a sustainable investment. This has been in place since January 2022.

Carmignac Portfolio EmergentsCarmignac Portfolio Grande Europe
Carmignac Portfolio Patrimoine EuropeCarmignac Portfolio Family Governed
Carmignac Portfolio PatrimoineCarmignac Portfolio Emerging Patrimoine
Carmignac Portfolio GrandchildrenCarmignac Portfolio Investissement
Carmignac Portfolio Sécurité*

(* Please note that specifically for the Sub-Fund Carmignac Portfolio Sécurité, the definition of sustainable investment also includes investments in use of proceeds bonds such as green, social or sustainable corporate or sovereign bonds and investments in sustainability-linked bonds.)


Effective 17 July 2023, we are updating this sustainable investment framework, to better reflect the way companies operate in their “value chain” and formalise the “trajectory” perspectives of sustainable investing. Under the enhanced framework, all securities are analysed to determine, even more holistically, the significance of their entire current and future impacts on sustainability.

Going forward, for a company to be considered aligned with our SDG-outcomes framework it must meet at least one of the three below criteria, including a newly introduced criterion “SDG operational alignment”:

  • SDG revenue alignment

    A company’s products and services that are aligned with at least one of nine selected SDGs must account for 50% or more of revenues.

    • This criteria is unchanged from the existing framework.
  • SDG capital expenditure alignment

    A company’s capital expenditure (“capex”) that is aligned with at least one of nine selected SDGs must account for 30% or more of its total capex.

    • This is amended (from 50%) to better reflect the importance of supporting companies that are “transitioning”. We are confident that 30% represents a significant proportion of the future business strategy and helps ensure that we don’t exclude companies that are moving in the right trajectory.
  • SDG operational alignment

    : A company’s operational practices must be adequately aligned with at least three of all SDGs, with no significant misalignment with any SDGs. A standardised external scoring methodology is utilised to assess the level of alignment a company’s operational practices have with all the SDGs.

    • This newly introduced assessment will ensure the significant impact a company’s operations can have on the SDGs is incorporated into our framework. By studying the operations and activities of investee companies, rather than relying solely on the capital allocation and/or proportion of revenue, we are broadening the lens through which we assess a company’s impacts upon the SDGs.

3. Reclassification of sub-fund Carmignac Portfolio Emerging Discovery as an Article 8 fund

Aligned with our review of the sustainable investment framework and consistent with our ongoing analysis of our range of Sub-Funds, we have assessed the proportion of sustainable investments held across portfolios. The portfolio of the Sub-Fund Carmignac Portfolio Emerging Discovery has evolved in the last year and as a consequence will be reclassified as Article 8 under the European Sustainable Finance Disclosure Regime (SFDR).

The Sub-Fund has previously had a significant proportion of its assets aligned with SDGs, while retaining its classification as an Article 6 fund under SFDR. For example, at the beginning of 2022, the number of sustainable investments held in the Sub-Fund was approximately 60%. The Sub-Fund subsequently changed its investment philosophy to focus more on growth areas in emerging markets. This resulted in greater alignment with the types of businesses that are highlighted through our SDG framework. As a result, the Sub-Fund now holds approximately 90% sustainable investments.

In light of the increase in the proportion of sustainable investments held in the portfolio, from 17 July 2023, the Sub-Fund will be reclassified as Article 8 under the SFDR, having previously been classified as Article 6.

The Sub-Fund will implement the SDG-outcomes framework (as described above in section 2 of this letter) to determine sustainable investments.

As an Article 8 fund, the Sub-Fund will promote environmental or social characteristics. As a result of the reclassification, from 17 July 2023, the Sub-Fund will commit to holding a minimum of 50% sustainable investments (up from 0%, as is typical for an Article 6 fund), with minimum levels of sustainable investments with environmental and social objectives of 5% and 15%, respectively.

4. Reclassification of sub-fund Carmignac Portfolio Climate Transition as an Article 8 fund with enhanced climate transition framework

The Sub-Fund Carmignac Portfolio Climate Transition is our thematic fund which seeks to generate attractive returns by investing in long-term sustainable growth sectors and companies at the heart of the “green” revolution and climate transition, while positively contributing to the environment by helping the transition to a lower carbon economy.

Until now, the Sub-Fund has utilized a framework based partly on the EU taxonomy standard that primarily focuses on environmental sustainability to determine whether a security is a sustainable investment.

Effective 17 July 2023, the Sub-Fund will implement our enhanced climate transition framework, whereby heavy emitting companies must also meet a new criterion (in addition to one of the two existing criteria) to be considered a sustainable investment:

  • Climate mitigation

    At least 10% of a company’s revenue or capital expenditure (capex) must be aligned with climate mitigation or adaptation, according to the EU Taxonomy.

    • This is consistent with the existing framework.
  • Commodity extraction for energy transition

    At least 10% of a company’s revenues must be from metals and minerals associated with the energy transition. This includes copper, nickel, lithium, manganese, cobalt, uranium, chromium, molybdenum, zinc, rare earths, silicon and uranium. As emission-reducing technologies innovate, additional materials may become more or less relevant.

    • This is consistent with the existing framework.
  • Heavy emitters with a greenhouse gas reduction target

    In addition to meeting one of the above two criteria, any company with heavy emissions (defined as being in the top 25% of emitting companies on the metric of Scope 1, 2 and 3 greenhouse gas emissions per euro of enterprise value including cash) must also have a science-based greenhouse gas reduction target that is approved by the Science Based Targets Institute.

    • This newly introduced assessment is designed to encourage companies to align their climate strategy with science-based targets. We consider this be an independent, gold standard indicator of a credible intention to transition.

    • All heavy emitters must comply with this criterion and one of the Climate mitigation and commodity extraction criteria.

As a result of the review of our climate transition framework, which introduces a new criterion for heavy emitters, a number of companies in the current Sub-Fund portfolio will no longer qualify for the enhanced definition of sustainable investment. These investments will fall into the “transitioners” category, i.e. those companies that are currently heavy emitters committed to transitioning to a more sustainable position but which don’t currently have a science-based target covering Scope, 1, 2 and 3 greenhouse gas emissions.

It is our conviction that investments in “transitioners” are an essential part of achieving a transformation to a net-zero economy and thus are aligned with the Sub-Fund’s objective. As a result of our conviction regarding transitioners and our desire to provide consistency and visibility for investors, we have taken the decision to reclassify the Sub-Fund as Article 8, from Article 9.

As a result of the reclassification and the enhanced definition of sustainable investment, from the effective date of 17 July 2023, the Sub-Fund will hold a minimum of 30% sustainable investments, changed from 80%, as is typical for an Article 9 fund. The Sub-Fund’s investment approach and strategy will remain unchanged.

5. Further information on our sustainable investment framework

While we are making the definitional changes described above, these sit within a longstanding sustainable investment framework whereby even if a company passes one of these screens or definitions, they are still subject to:

  • individual security due diligence, including negative screens and reviews via our proprietary ESG platform, START, to understand the ESG and sustainability characteristics of the full business.

  • stewardship oversight (engagement and voting) once a security is held in a portfolio.

  • transparent reporting to clients on our investment decisions and stewardship activities.

We believe this multi-dimensional approach gives portfolio managers and clients a clear and measurable assessment of the sustainability outcomes of a security, consistent with industry best practice and our position as a responsible asset manager.

6. Changes to sub-fund Carmignac Portfolio Patrimoine Europe

We will perform the following minor amendments to the investment limits of the Sub-Fund Carmignac Portfolio Patrimoine Europe.

  • Current investment limit

    This Sub-Fund invests at least 40% of its net assets in debt securities issued by companies/issuers that have their registered office or carry out the bulk of their business in European countries or that are issued in a European currency. The Sub-Fund also invests in equities from European countries or issued by companies/issuers that have their registered office or carry out the bulk of their business in European countries, including Turkey and Russia.

    Net exposure to equities and debt instruments denominated in a currency different from a European currency and exposure to currencies different from European currencies are both limited to 20% of the Sub-Fund’s net assets.

  • Revised investment limit

    The Sub-Fund mainly invests in European equities and bonds. European equities refer to equity of companies that have their registered office or carry out the bulk of their business in European countries, including Turkey and Russia. European bonds refer to debt securities issued by companies/issuers that have their registered office or carry out the bulk of their business in European countries or are issued in a European currency.

    Net exposure to non-European currencies is limited to 20% of the Sub-Fund’s net assets.

Furthermore, please note that the management company, through its UK branch and investment team in London, will assume full responsibility for investment management of the Sub-Fund. Until now, the Sub-Fund’s investment management has been performed partially by the management company’s investment team in London and partly by its parent company’s investment team in Paris.

The abovementioned changes to investment limits will take place after a one (1) month notice period on 17 August 2023. Shareholders who do not accept this modification have a right to redeem their shares free of charge within thirty (30) days following the publication of this notice.

7. Effective date

The changes to items 2 – 4 will take effect on July 17, 2023.

The changes to investment limits indicated in item 6 will take effect on August 17, 2023.

The amendments described above are not intended to otherwise impact the investment objectives, investment strategies, investment risks or fees of the Sub-Funds.

If you have any questions regarding the above changes, please do not hesitate to contact your financial advisor. If you are a Carmignac distribution partner and your clients have questions about this, please contact your local professional client representative.

Yours faithfully,

Eric HELDERLE
Director

ISINs :

Item 2 :
LU1299303229 ; LU1792391242 ; LU1299303062 ; LU0992627025 ; LU0992626480 ; LU0992626563 ; LU0992626993 ; LU1623762413 ; LU0992626720 ; LU2420650777 ; LU2420651072 ; LU0099161993 ; LU0807688931 ; LU0807689079 ; LU0807689152 ; LU0294249692 ; LU0992628775 ; LU0992628858 ; LU2139905785 ; LU0992628932 ; LU1623761951 ; LU2206982626 ; LU2212178615 ; LU2420652633 ; LU2420652807 ; LU2420652989 ; LU1744628287 ; LU2181689576 ; LU2427321380 ; LU1932476879 ; LU2490324840 ; LU2490324683 ; LU1744630424 ; LU2369619742 ; LU2427321463 ; LU2490324766 ; LU1966630706 ; LU2004385154 ; LU1966630961 ; LU1163533422 ; LU1163533695 ; LU1299305190 ; LU1299305356 ; LU1299305513 ; LU1299305786 ; LU1299305943 ; LU1163533349 ; LU0992628429 ; LU0992628692 ; LU0992627611 ; LU1792391671 ; LU1163533778 ; LU0992627702 ; LU0992627884 ; LU0992627967 ; LU0992628346 ; LU0592698954 ; LU0807690911 ; LU0807690838 ; LU0592699259 ; LU0592699093 ; LU0992631647 ; LU0992631720 ; LU0992631993 ; LU0992632025 ; LU1966631001 ; LU2004385667 ; LU1966631266 ; LU2427320655 ; LU2427320739 ; LU2420652393 ; LU2420652476 ; LU1299311164 ; LU1299311321 ; LU1299311677 ; LU1299311834 ; LU0992625839 ; LU2426951195 ; LU1299306321 ; LU1299306677 ; LU1299307055 ; LU1299306834 ; LU0992624949 ; LU1792391911 ; LU0992625086 ; LU0992625243 ; LU2420653367 ; LU2490324253

Item 3:
LU0336083810 ; LU0807689582 ; LU0992629740 ; LU0992630169 ; LU1623762256 ; LU0992630086 ; LU2420651155 ; LU2420651239 ; LU2427320499 ; LU2427320572

Item 4:
LU0164455502 ; LU0807690754 ; LU0705572823 ; LU0992629237 ; LU1623762090 ; LU0992629401

Item 6 :
LU1744628287 ; LU2181689576 ; LU2427321380 ; LU1932476879 ; LU2490324840 ; LU2490324683 ; LU1744630424 ; LU2369619742 ; LU2427321463 ; LU2490324766

Thank you for taking the time to provide your feedback, appreciated.

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Marketing communication. Please refer to the KID/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.

Morningstar Rating™ : © Morningstar, Inc. All Rights Reserved. The information contained herein: is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Access to the Funds may be subject to restrictions regarding certain persons or countries. This material is not directed to any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the material or availability of this material is prohibited. Persons in respect of whom such prohibitions apply must not access this material. Taxation depends on the situation of the individual. The Funds are not registered for retail distribution in Asia, in Japan, in North America, nor are they registered in South America. Carmignac Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. The Funds may not be offered or sold, directly or indirectly, for the benefit or on behalf of a «U.S. person», according to the definition of the US Regulation S and FATCA. The risks, fees and ongoing charges are described in the KID (Key Information Document). The KID must be made available to the subscriber prior to subscription. The subscriber must read the KID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds present a risk of loss of capital.

The Funds’ prospectus, KIDs, NAVs 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.

  • In France, Luxembourg, Sweden: The risks, fees and ongoing charges are described in the KID (Key Information Document). The KID must be made available to the subscriber prior to subscription. The subscriber must read the KID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds present a risk of loss of capital. The Funds’ prospectus, KIDs, NAV and annual reports are available at www.carmignac.com, or upon request to the Management.

  • In the United Kingdom: the Funds’ respective prospectuses, KIIDs and annual reports are available at www.carmignac.co.uk, or upon request to the Management Company, or for the French Funds, at the offices of the Facilities Agent at BNP PARIBAS SECURITIES SERVICES, operating through its branch in London: 55 Moorgate, London EC2R. This document was prepared by Carmignac Gestion, Carmignac Gestion Luxembourg or Carmignac UK Ltd. 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 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: Hamilton Centre, Rodney Way, Chelmsford, Essex, CM1 3BY, UK; Registered in England and Wales with number 4162989. Carmignac Gestion Luxembourg SA has been appointed as the Investment Manager and distributor in respect of the Company. Carmignac UK Ltd (Registered in England and Wales with number 14162894) has been appointed as a sub-Investment Manager of the Company and is authorised and regulated by the Financial Conduct Authority with FRN:984288.

  • In Switzerland: the prospectus, KIDs 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, Montrouge, Nyon Branch / Switzerland, 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.