Carmignac Portfolio Climate Transition: Letter from the Fund Manager
![[Management Team] [Author] Wiskirski Michel](https://carmignac.imgix.net/uploads/NextImage/0001/18/%5BManagement-Team%5D-Wiskirski-Michel.png?auto=format%2Ccompress&fit=fill&w=3840)
indicator’s1 performance in the 3rd quarter
In the third quarter of 2023, Carmignac Portfolio Climate Transition fell by -8.85%, while its reference indicator1 was down -0.46%. The Fund posted a performance of -2.36% over the year to date, compared to +10.94% for its reference indicator.
Quarterly Performance Review
The quarter was mainly marked by the sharp rise in American interest rates, nominal and real. The resilience of the American economic figures, excellent performance of the job market and robust salaries contributed to this increase observed over the quarter. Whilst the American economy did not weaken, the old continent remains in a more precarious situation where industrial weakness dominates, partly due to China still slowing down.
The American economy has clearly performed well during the summer period. The cumulative increase in interest rates of nearly 550 basis points over the last eighteen months does not seem to have slowed down economic activity across the Atlantic as much as expected, in fact quite the contrary. The figures confirm a certain robustness of the economy. The job market is showing fantastic resilience with a historically low unemployment rate and demand for workers still very high. Given the tensions on the job market, wages continued to trend well. All this has allowed the American consumer to maintain confidence. On the inflation side, although the disinflation dynamic of recent months has continued its course, we nevertheless observe certain components, particularly in terms of prices of certain services, which are resisting this dynamic. This resistance keeps the American monetary authorities in a delicate and cautious position, refusing to declare victory and keeping all options open. All of these elements contributed to a significant rise in interest rates, over the quarter.
The energy market has also experienced a number of developments which have fuelled the rise in interest rates. The two pillar countries of the OPEC + cartel decided to restrict oil valves from July. This increased control over the black gold market resulted in a unilateral Saudi reduction of 1 million barrels per day accompanied by a reduction in Russian supplies of 300 thousand barrels per day as well. These declines occurred even though consumption remained healthy, leading to an increase in the price of a barrel to $95 at the end of the quarter. This increase in the energy cost of black gold is not isolated; the price of gas, particularly in Europe, has also increased. Repetitive strikes on the Australian side, disrupted American liquefied natural gas production and other prolonged periods of maintenance have revived the fears of last autumn regarding the next winter gas supply.
The sharp rise in interest rates and this unexpected robustness of the American economy weighed on certain sectors of the equity market, particularly those perceived as defensive and long duration. The “utilities” sector has particularly suffered from the combination of these two phenomena. In addition, the renewable energy sector has experienced some upheavals which have weighed heavily on the entire sector. The difficulties of Siemens Energy and Orsted have weighed heavily on the wind power sector. Orsted, which we hold as an investment, was obliged to announce a provision for asset impairment relating to certain of its American offshore projects. Rising rates, ongoing logistics problems as well as uncertainties about the details of the “inflation reduction act” led the company to this unexpected announcement. If the difficulties of American projects continue to weigh heavily on the stock, the existing portfolio of wind turbines in operation as well as future European and other growth prospects should allow the stock to regain colour once the operational difficulties across the Atlantic are resolved. The wind sector is also awaiting further clarification from Siemens Energy regarding the quality problems with some of their turbines highlighted a few months ago. These uncertainties and quality problems also strongly affected our stake in the wind blade supplier TPI Composites, leader in the segment, having been heavily penalized during the quarter. If the sector has suffered from both idiosyncratic difficulties and an unfavourable macroeconomic context, its current valuation makes it very attractive from a medium to long term perspective. The market effect on this theme which represents approximately 30% of our portfolio explains the steep underperformance over the quarter.
How is the fund positioned?
The fund's composition remains largely unchanged, with a defensive positioning that retains a strong allocation to the utilities sector, through large stakes in RWE and Nextera Energy, as well as large positions in sectors such as Waste Management, which should be less sensitive to the anticipated slowdown. Our strong convictions in the semiconductor sector remain intact, with Samsung Electronics and Taiwan SemiConductor Manufacturing among our largest holdings at the end of the quarter.
What is our outlook for the coming months?
In the weeks and months to come, economic activity is likely to decline given the historic monetary tightening that we have just experienced. This should be favourable to equity assets that are not very sensitive to the cycle and have long duration, thus allowing many of our holdings such as RWE to recover.
Carmignac Portfolio Climate Transition
A thematic equity fund acting for climate change mitigationDiscover the fund pageCarmignac Portfolio Climate Transition A EUR Acc
- Recommended minimum investment horizon
- 5 years
- Risk indicator*
- 5/7
- 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
- 1,80% of the value of your investment per year. This estimate is based on actual costs over the past year.
- Performance fees
- 20,00% when the share class overperforms the Reference indicator during the performance period. It will be payable also in case the share class has overperformed the reference indicator but had a negative performance. Underperformance is clawed back for 5 years. 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
- 0,32% 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 Portfolio Climate Transition | 7.9 | -16.2 | 21.7 | 5.5 | -17.7 | 14.8 | 4.5 | 10.4 | -15.1 | 1.8 |
| Reference Indicator | -2.2 | -19.7 | 41.7 | 5.1 | -9.6 | 18.8 | -11.1 | 27.5 | -13.0 | 18.1 |
| Carmignac Portfolio Climate Transition | - 3.4 % | + 2.1 % | + 1.0 % |
| Reference Indicator | + 10.0 % | + 9.0 % | + 6.5 % |
Source: Carmignac at 29 Nov 2024.
Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor).
Related articles
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.
Morningstar Rating™ : © Morningstar, Inc. All Rights Reserved. The information contained herein: is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
Access to the Funds may be subject to restrictions regarding certain persons or countries. This material is not directed to any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the material or availability of this material is prohibited. Persons in respect of whom such prohibitions apply must not access this material. Taxation depends on the situation of the individual. The Funds are not registered for retail distribution in Asia, in Japan, in North America, nor are they registered in South America. Carmignac Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. The Funds may not be offered or sold, directly or indirectly, for the benefit or on behalf of a «U.S. person», according to the definition of the US Regulation S and FATCA.
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.
The Management Company can cease promotion in your country anytime.
Investors have access to a summary of their rights in English on the following links: UK ; Switzerland ; France ; Luxembourg ; Sweden.