Carmignac Investissement: Letter from the Fund Manager - Q2 2026

During the second quarter of 2026, Carmignac Investissement delivered a performance of +18.15%, outperforming its reference indicator, which posted a gain of +15.82%³.
Performance since the beginning of year stands at +13.54% compared with +14.28% for its reference indicator.

After a volatile first quarter, global equity markets rallied sharply in the second quarter of 2026. The rebound was driven primarily by the de-escalation of the conflict in the Middle East, which triggered a significant decline in oil prices, and by a very strong first-quarter earnings season, particularly among companies exposed to artificial intelligence. Together, these developments encouraged markets to look beyond persistent inflation and monetary-policy concerns.

For much of the quarter, however, market leadership remained highly concentrated within the AI supply chain, particularly in semiconductors. Beneath the surface, the rally became increasingly erratic. While companies such as Micron, Intel, Arm and Marvell rose by several hundred percent, Nvidia performed broadly in line with the major indices. This divergence illustrated both the strength and the fragility of the market environment: enthusiasm around AI remained powerful, but leadership rotated rapidly and valuations became increasingly stretched in certain parts of the sector.

Towards the end of the quarter, early signs of a reversal began to emerge, as market participation broadened beyond the most crowded technology stocks.

From a geographic perspective, emerging markets were the strongest performers, led by exceptional gains in Korea and Taiwan on the back of their semiconductor exposure. US, European and Japanese equities also delivered robust returns, supported by resilient corporate earnings, improving economic confidence and easing geopolitical risks.

Another major event was the SpaceX IPO, the largest in history, followed shortly afterwards by the launch of a $25 billion bond offering. These transactions provided a further illustration of the substantial financing and investment requirements associated with the development of AI infrastructure.

Central banks maintained a hawkish stance during the quarter. The European Central Bank resumed its tightening cycle with a rate increase, while the Bank of Japan continued its gradual policy normalisation. June also marked Kevin Warsh’s first meeting as Federal Reserve Chair. His more hawkish-than-expected tone surprised equity markets. Looking ahead, reduced forward guidance from the Fed could contribute to greater interest-rate volatility, with potential spillover effects across equity markets.

The Fund outperformed its reference indicator in the second quarter of 2026, with technology providing the largest contribution to both absolute and relative performance. SK Hynix and TSMC were the two main contributors. Following its very strong performance, we took profits in a significant portion of our exposure to the leading memory-chip manufacturer, as its high-beta profile led us to adopt a more cautious stance.

Stock selection in the industrial sector also contributed positively, with Prysmian and Safran among the strongest performers.

Healthcare and financials detracted overall, although several individual holdings delivered strong returns. Lantheus, a diagnostic-imaging specialist focused on radiopharmaceuticals, particularly for prostate cancer detection, performed well, as did digital-payments company Block.

On the negative side, recently initiated position Wise and electronic-trading platform Tradeweb were the largest detractors.

Markets remain highly momentum-driven, with narrow leadership and signs of excess in parts of the AI trade. In both the U.S. and Asia, equity indices have been carried by one dominant theme: semiconductors. What began as enthusiasm for the leading AI beneficiaries has increasingly spread to smaller and lower-quality semiconductor names, some of which have doubled or tripled in recent months. In several cases, valuations now appear to discount years of aggressive growth, despite limited visibility on fundamentals. At the same time, many high-quality companies outside technology remain deeply out of favour, despite strong fundamentals and healthy earnings.

In the coming months, we expect the AI debate to enter a new phase. Investors are increasingly questioning whether hardware companies are capturing too much of the value created by AI. Semiconductor and hardware suppliers are benefiting from bottlenecks and pricing power, but rising infrastructure costs could eventually weigh on demand. Efficiency is also becoming a more important theme, with growing focus on cheaper models, open-source alternatives, and better routing of AI workloads to reduce token usage and infrastructure costs.
Against this backdrop, we have tactically reduced our exposure to hyperscalers and moved away from the most speculative semiconductor names. Within the sector, we are increasingly favouring higher-quality market leaders where valuations remain more attractive and earnings visibility is stronger, such as Nvidia.

More broadly, we took profits in technology and reallocated capital towards lagging quality companies in other sectors. Within financials, we used recent weakness to reinforce exposure across a broad range of business models, from emerging-market banks in Latin America, such as Itaú Unibanco, which offer diversification away from the AI trade and indirect exposure to commodities, to payment companies such as Mastercard and financial-market infrastructure providers including S&P Global and Tradeweb. Berkshire Hathaway also entered the portfolio’s top ten holdings, supported by its depressed valuation and defensive characteristics.

In healthcare, we reinforced defensive positions in drug distributors such as Cencora and McKesson, while initiating positions in companies including Zoetis and AstraZeneca.

Our objective is to build a more balanced portfolio. On one side, we retain exposure to the structural growth of AI, with a focus on semiconductor companies. On the other, we are investing in high-quality businesses trading at depressed valuations that should prove resilient and benefit from any broadening or rotation in market leadership.