Investment Universe, Process, Strategy and Benchmark – How does the Fund Manager invest? (ISIN: FR0010148981)
Investment Universe
a. Asset Classes
Carmignac Investissement is an international equity fund. At least 60% of its net assets are permanently exposed to equity markets. The fund’s main performance drivers are therefore equities and currencies. Fixed income instruments may be used on an ancillary basis.
• International equities
- International Equities
- Emerging market equities
- Derivatives
• Currencies
- G3, Sterling, Dollar block
- Emerging country currencies
- Futures and options
b. Investment Constraints
• Equities: at least 60% of the portfolio
• Modified duration of the portfolio: [-4 to +5]
• Average minimum rating of the Fixed Income component: BBB- (S&P) / Baa3 (Moody’s)
Fund Management Team
Carmignac Investissement is managed by Edouard Carmignac.
Macroeconomic research and derivatives strategies are handled by both Frédéric Leroux and Edouard Carmignac.
Other portfolio managers and analysts take part in the management of Carmignac Investissement by providing their specific expertise (regions, sectors, asset class…).
Strategy
Carmignac Investissement is managed on a discretionary basis and employs an active asset allocation policy. It invests in international stocks with no constraint as to regions, sectors, stock types or size.
As the fund is managed on an active and discretionary basis, its asset allocation may differ substantially from that of its performance indicator (MSCI All Countries World Free – Eur). Likewise the portfolio established in each of the asset classes on the basis of detailed financial analysis may also vary considerably from the weightings of the performance indicator in terms of regions, sectors… However, Carmignac Investissement seeks to maintain a risk profile comparable to that of its performance indicator.
Investment Process
The basis of the decision process applied to all funds managed by Carmignac Gestion lies in the daily Investment Committee. This meeting is aimed at monitoring portfolio managers’ activity as well as ensuring that within each fund, the management approach is in accordance with in-house processes as well as with our core macroeconomic scenario.
The daily investment committee, chaired by Edouard Carmignac, does indeed gather portfolio managers, analysts, the Deputy Managing Director, Eric Le Coz and the portfolio management spokesperson, Didier Saint-Georges. Participants discuss recently published macroeconomic data, market news that might have an impact on investments, risk factors and technical analysis. Portfolio managers and analysts highlight the key factors driving the region or sector for which they are responsible and share the results of corporate visits.
As a consequence, this committee fosters high reactivity in the daily oversight of the fund’s strategic and tactical allocation.
Investment Objectives
Over the recommended investment period of 5 years, Carmignac Investissement seeks to maximise performance through an active and non-benchmarked management approach, with no constraint in terms of regions, sectors, types and market capitalisations. Moreover the fund intends to outperform its performance indicator – MSCI All Countries World Free – Eur.
The fund’s strategy consists in exploiting the best growth opportunities identified in the macroeconomic scenario. Both equities and currencies are the fund’s main performance drivers.
Performance Review 2008
Edouard Carmignac: "Despite rallying in the fourth quarter, Carmignac Investissement recorded its worst ever performance in 2008 (-29.9%), against a decline of 40.61% for its performance indicator. This disappointing result mainly came about as we neglected to take sufficient account of the worsening of the financial crisis following the Lehman Brothers collapse, with the Fund failing to recover after the sharp market downturn of September and October. In November, while the markets continued to trend downward (-12.1%), the Fund achieved a positive performance (+4.3%) thanks to a thorough restructuring of the portfolio in favour of more defensive stocks along with an increase in hedges. This turnaround was largely due to the solid performance of our European pharmaceuticals, although the sharp rebound in goldmining stocks and domestic Chinese equities was also a contributing factor."
Performance Review 2009
Edouard Carmignac: "During 2009, the Fund recorded a rise of 42.6%, compared with 27.4% for its performance indicator. The Fund benefited from the accuracy of our economic forecasting and took full advantage of the opportunities available in terms of investment in international equities. Having hedged the portfolio at the right time for the market downturn at the beginning of the year, the Fund then re-indexed during the month of March, allowing it to reap the full benefits of the rebound in the equity markets."
Performance Review 2010
Edouard Carmignac: "For the 2010 financial year, the Fund posted a rise of +15.76%, compared with an increase of +18.09% for its performance indicator. This more moderate rise stems from our cautious management strategy. Our short derivatives positions on equity indices, taken to protect ourselves from the risk of the Greek crisis spreading, our occasional commitments on futures betting on a rise in US long-term yields and, to a lesser extent, our long dollar positions are the root causes of the majority of this underperformance. The stocks selected, particularly in the energy, materials, finance and healthcare sectors, considerably outperformed their respective markets."
Performance Review 2011
Edouard Carmignac: "In 2011, the Fund saw a 9.95% decline on the year below the decline of 6.39% seen by its performance indicator. The year 2011 turned to be a particularly frustrating year for Carmignac Investissement. While the macroeconomic analysis that we conducted throughout the year was anything but unsubstantial, the fund’s performance was nonetheless disappointing. Having rapidly taken the measure of the depth the European crisis and the systemic risk that it implied for the global economy, we opted for limited exposure to equity markets, obtained largely by hedging against falls in European indices. This cautious approach made it possible to cushion the effects of the European crisis during the summer but had a substantial relative cost in the fourth quarter. Faced with systemic risk, we favored the objective of preserving capital above all else."
Performance 2012 - Year-to-Date
Edouard Carmignac: "As of March 31st 2012, Carmignac Investissement has been rising by +6.64% compared to an increase of +8.48% for its performance indicator. Indeed the rebound of equity markets started at the end of 2011 has continued through 2012. The positive development of the Greek debt crisis combined with recovering leading economic indicators in the United States enabled markets to erase most of their 2011 decline. In this environment the Fund benefited from the rally of the financial and consumer discretionary sectors. Our initial defensive positioning explains the slight underperformance over the quarter."
