Carmignac Portfolio Emerging Patrimoine

Over the month of July, emerging markets went down, suffering from fears of a more severe-than-expected economic slowdown in the United States.

In this environment, the Chinese, Latin American and South Korean markets declined, at the exception of India that went up.

The Chinese Communist Party's Third Plenum did not adopt any major measures to support the economy.

China cut its one-year medium-term lending facility (MLF) rate by 20 basis points to 2.2%. However, these measures were not enough to support the Chinese markets.

Latin American markets also declined due to political uncertainties and the weakness of agricultural commodity prices since the beginning of the year.• In currencies, the unwinding of carry trade positions led to high volatility in emerging currencies over the month.

Against this backdrop, the fund delivered a negative performance over the month.

Our Equity investments weighed on performance, particularly our AI related Tech holdings, which were impacted by uncertainties over the AI trade, penalizing our positions in TSMC, Elite Material and Lite-On.

On the fixed income side, our investments in local and external debt both made a positive contribution.

On the local bonds, our positions in Mexican, South African, Polish and Czech local rates were contributed positively to performance.

Currencies had a slight negative impact, with the dollar depreciating against the euro, but our long positions in currencies such as the Chilean peso and Mexican peso performed well.

We remain constructive on emerging markets assets in an environment marked by a slowdown in the US economy, which could potentially allow the Federal Reserve to cut interest rates in the near future. Against this backdrop, we have increased our modified duration (close to 480 basis points across the Fund).

On the fixed income side, we have increased our allocation to local debt of countries where inflation is falling, real rates are high and monetary easing cycles have been slowed or interrupted.

This is particularly the case in countries such as Poland, the Czech Republic, Mexico, Brazil and South Africa, which are sensitive to the monetary policies of the Fed and the ECB and are therefore likely to cut interest rates in the near future.

On the equities side, we have increased our Equity exposure to 33%, with significant exposure to Asian markets, particularly Korean and Taiwanese technology stocks, where the artificial intelligence theme is growing sustainably, and valuations remain reasonable after the correction of recent weeks.

Finally, we remain cautious on EM currencies. However, we are maintaining our preference for certain Latin American currencies, notably the Brazilian real and the Chilean peso, given the high real interest rates in these countries. Over the period, we increased our allocation to the Korean won, which benefits from improving current account balance.