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Carmignac Investissement: Letter from the Fund Manager
Over the first quarter of 2025, Carmignac Investissement returned -7.68% compared with -5.41% for its reference indicator2.
Market environment
Wall Street experienced its worst quarter in nearly three years, driven by fears that tariffs imposed by Donald Trump could lead to stagflation in the world's largest economy.
Over the period, mega cap US stocks, which have been market leaders in recent years, saw significant declines after years of outperformance. Initially, the sector was impacted by the release of DeepSeek's R1, which raised concerns about the sustainability of the boom in spending on artificial intelligence (AI) infrastructure. Nvidia's shares dropped by nearly 20% in the first quarter despite no change in the company's fundamentals.
Broader concerns were further exacerbated by substantial policy uncertainties from the Trump administration, leading to significant economic fears as both consumer and business sentiment deteriorated sharply. Following Trump's election victory, market expectations were high; however, investor hopes have been dampened by the unexpected negative policy sequencing that prioritized stagflationary measures, such as tariffs and budget cuts, while sidelining "pro-growth" initiatives.
In this scenario, European equities have outperformed their US counterparts due to heightened policy optimism in Germany and hope for European unity in light of Trump’s stance on Ukraine.
Emerging markets also outperformed the US markets, with China leading the way. This was driven by renewed investor enthusiasm around China’s expected policy support.
How did we fare in this context?
During the quarter, the Fund underperformed its reference indicator primarily due to its exposure to the technology sector. Additionally, the Fund's underweight positions in banks, Europe, and China contributed to the underperformance.
The largest detractor during the period was TSMC, the Fund's biggest holding. More broadly, our technology stocks/ mega caps such as Amazon, Nvidia, Alphabet, and Broadcom also weighed on the performance. The sharp price movements in the tech sector were first attributed to a reduction in positions of high-performing stocks. Then, concerns over tariffs as well as data centre demand have exerted downward pressure on the markets, particularly on our Taiwanese holdings in the fund. Nevertheless, the fundamentals across the technology value chain remain robust. Planned capital expenditures, which serve as the primary growth drivers for the sector, are still strong. Hyperscalers have already projected a significant 70% increase in capital expenditures for 2025, primarily directed towards the chips and data centres essential for supporting AI's intensive computational demands. As at the quarter end, we are therefore currently maintaining our tech positions.
In this environment, Cencora and McKesson emerged as key contributors to performance. These companies are the largest distributors of drugs in North America, serving retail pharmacies and hospitals. These defensive companies within a defensive sector are driven by the volume of drugs distributed in the US.
Outlook
On April 2, 2025, President Donald Trump declared "Liberation Day," a move that reshaped the global economic landscape. The US administration swiftly imposed a minimum 10% tariff on all exporters, with certain trading partners facing even steeper duties. This marks a period filled with political and economic uncertainties, reminiscent of the last three financial crises combined.
Much like the fears of a technology bubble during the 2000 crisis, there are concerns about the current technological landscape. But today’s tech giants are far from speculative bets; they’re raking in real profits. Just as fiscal policies significantly impacted financial markets during the Global Financial Crisis (GFC), current fiscal measures are wielding similar influence. However, today's austerity measures may be temporary, with the potential for future relaxation. Furthermore, akin to the self-inflicted economic shutdown during the COVID-19 pandemic, tariffs are currently disrupting the economy. However, tariffs, similar to the COVID-related shutdowns, could potentially be rolled back, although there are no clear signs of this happening currently.
What does it mean for equity markets?
In a market environment influenced by political rhetoric, many investors tend to take off risk. Our strategy focuses on recognizing the long-term potential of equities. This involves identifying companies that are positioned to resist in the evolving landscape of a potential Trump 2.0 administration and with a rising risk of recession.
We favour assets such as growth stocks that are less dependent on the economic cycle across the US, Europe, and EM; and stocks already reflecting a high level of uncertainty in their valuations compared to the robustness of the fundamentals.
As the current situation forces Europe to become more self-reliant and simultaneously creates a multipolar world, we have reinforced two themes within our portfolios: aerospace & defense, and electricals & factories. Although our portfolio already had exposure to the aerospace value chain, we have reinforced this focus to benefit from the proposed increased military spending in Europe.
Furthermore, we believe that global data centre capital expenditures (capex) are set to grow at a 30% CAGR, benefiting power and electrical equipment suppliers. Currently, the US has 135GW of planned capacity additions versus a current 27GW install base. Consequently, we have capitalized on the recent correction in the data centre value chain to build exposure to companies like Eaton and Schneider Electric.
Despite negative sentiment affecting the tech sector, we are currently keeping our tech investments broadly unchanged. While there is a lot of noise in the market, little has changed regarding the fundamentals. However, we have implemented tactical hedges to cushion against volatility.
Carmignac Investissement A EUR Acc
- Recommended minimum investment horizon
- 5 years
- Risk indicator*
- 4/7
- SFDR - Fund Classification**
- Article 8
*Risk Scale from the KID (Key Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time. **The Sustainable Finance Disclosure Regulation (SFDR) 2019/2088 is a European regulation that requires asset managers to classify their funds as either 'Article 8' funds, which promote environmental and social characteristics, 'Article 9' funds, which make sustainable investments with measurable objectives, or 'Article 6' funds, which do not necessarily have a sustainability objective. For more information please refer to https://eur-lex.europa.eu/eli/reg/2019/2088/oj.
Main risks of the fund
Fees
- Entry costs
- 4,00% of the amount you pay in when entering this investment. This is the most you will be charged. Carmignac Gestion doesn't charge any entry fee. The person selling you the product will inform you of the actual charge.
- Exit costs
- We do not charge an exit fee for this product.
- Management fees and other administrative or operating costs
- 1,50% of the value of your investment per year. This estimate is based on actual costs over the past year.
- Performance fees
- 20,00% max. of the outperformance once performance since the start of the year exceeds that of the reference indicator and if no past underperformance still needs to be offset. The actual amount will vary depending on how well your investment performs. The aggregated cost estimation above includes the average over the last 5 years, or since the product creation if it is less than 5 years.
- Transaction Cost
- 1,30% of the value of your investment per year. This is an estimate of the costs incurred when we buy and sell the investments underlying the product. The actual amount varies depending on the quantity we buy and sell.
Performance
| Carmignac Investissement | 2.1 | 4.8 | -14.2 | 24.7 | 33.7 | 4.0 | -18.3 | 18.9 | 25.0 | -7.7 |
| Reference Indicator | 11.1 | 8.9 | -4.8 | 28.9 | 6.7 | 27.5 | -13.0 | 18.1 | 25.3 | -5.4 |
| Carmignac Investissement | + 7.4 % | + 12.2 % | + 4.5 % |
| Reference Indicator | + 8.0 % | + 15.5 % | + 8.8 % |
Source: Carmignac at 31 Mar 2025.
Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor).
Reference Indicator: MSCI AC World NR index
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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.
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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.
In Spain : The Funds are registered with the Spanish National Securities Market Commission (Comisión Nacional del Mercado de Valores) under the following numbers: Carmignac Sécurité 395, Carmignac Portfolio 392, Carmignac Patrimoine 386, Carmignac Absolute Return Europe 398, Carmignac Investissement 385, Carmignac Emergents 387, Carmignac Credit 2027 2098, Carmignac Credit 2029 2203, Carmignac Credit 2031 2297, Carmignac Court Terme 1111.
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