Carmignac Portfolio Patrimoine

In the US, the economy is slowly paving the way for a soft landing, with job creation and retail sales easing over the month. At the same time, inflation continued to trend lower. In Europe, growth surprised to the upside at +0.3% in the second quarter, while inflation picked up slightly.

As expected, the Fed left short-term rates unchanged during their July meeting. However, the combination of a less dynamic job growth and lower inflation sets the stage for the Fed to potentially lower rates in September.

The Bank of Japan raised interest rates for the first time in 15 years and unveiled a detailed plan to slow its massive bond buying, taking another step towards normalization.

In July, political volatility came from the US. Trump survived an assassination attempt, Biden ended his 2024 candidacy, and Harris' nomination boosted Democrats' standing in the polls, hinting at a closely contested election.

Equity market underwent a significant rotation during the month, with small cap and value stocks performing well and outperforming mega cap and growth stocks.

Yield have declined meaning over the month both in Europe and the US, while the yield curve steepens. In the credit market, investment grade (IG) bonds outperformed high yield bonds.

The Fund's performance was nearly flat over the month, underperforming its reference indicator.

Our equity stock selection suffered from the market rotation and were the main detractor to performance.

However, the inclusion of gold mining stocks, along with Financials and Industrials, partially mitigated the decline in our growth-oriented stocks.

The yield curve steepening was positive for the fund, even if our low modified duration did not allow us to take full advantage of the sharp decline in interest rates.

The performance was negatively impacted by exposure to currencies, primarily due to the volatility in the dollar, and despite the yen's recovery towards the end of the month.

The normalization of the labor market in the US means that a rate cut scenario is finally in sight.

Us growth is decelerating, but we favor more a soft landing rather than a recession.

In this scenario, our exposure to risky assets has evolved thanks to our options, but it remains in the middle of our range.

We remain cautious about the duration as the markets anticipate a high number of rate cuts, and we continue to expect steeper yield curves.

A return to the inflation target could be a source of disappointment, given the market's optimistic expectations justifying keeping inflation-linked instruments in the portfolio.