Carmignac

Back to school 2023 - Carmignac P. Emergents

  • +6.2%
    2023 YTD performance of Carmignac P. Emergents

    versus +2.8% for its ref. indicator.

  • +27.3%
    Relative performance of the Carmignac P. Emergents F EUR Acc over 5 years

    vs its reference indicator MSCI Emerging Markets NR Index.

  • 1st
    Quartile ranking for Carmignac P. Emergents for its YTD, 1Y, 3Y and 5Y returns

    vs its Morningstar category peers (Global Emerging Market Equity) as of 31/08/2023.

YTD market & fund overview

In 2023, EM Equities were slightly up but they underperformed global equities, being dragged down by high interest rates and the selloff of Chinese markets amid US-China tensions & slower than expected recovery.

Against this backdrop, Carmignac P. Emergents managed to outperform its ref. indicator, benefiting from:

  • The solid rebound in our Asian tech stocks, amid growing interest for semiconductors and AI. Positive contributions from world’s leading chip maker Taiwan Semiconductor, South Korea’s Samsung Electronics and Japanese semiconductor equipment specialist Tokyo Electron.

  • Its increased exposure to Latin American countries. Mexico (9.2% of the Fund’s assets) was the best-performing large EM in 2023, thanks primarily to Nearshoring, benefitting to our Mexican and pan LatAm holdings (Grupo Banorte, MercadoLibre). Our Brazilian names also posted a positive contribution, thanks to the rebound of our infrastructure/ utilities company Equatorial Energia.

However, against a difficult period for Chinese markets, we suffered from the weakness of some of our Chinese consumer (JD.com, Anta Sports) and healthcare holdings (Wuxi Biologics).

  • TOP 5 YTD CONTRIBUTORS

    • MINISO     Cons. Disc.     China
    • NEW ORIENTAL     Cons. Disc.     China
    • TAIWAN SEMICONDUCTOR  Tech  Taiwan
    • GRUPO BANORTE    Finance    Mexico
    • MERCADOLIBRE   eCommerce    Brazil
  • TOP 5 YTD DETRACTORS

    • JD.COM     Cons. Disc.     China
    • SEA LTD     eCommerce     Singapore
    • ANTA SPORTS     Cons. Disc.     China
    • WUXI BIOLOGICS   Healthcare   China
    • ELETROBRAS    Utilities     Brazil

Throughout the year, we decided to maintain an overweight position in China as we believe the valuations of the quality companies that we have on the portfolio had become too extreme and disconnected from their good fundamentals.

  • This proved to be the right strategy as our top Chinese convictions posted solid returns YTD, ahead of consensus estimates (New Oriental, Beike, Miniso, JD), with Miniso and New Oriental enrolling among our best contributors YTD (see above).

  • We also benefited from our hedging strategy on the Chinese Yuan, implemented at the beginning of the year to protect our Chinese portfolio in a context of weakening RMB.

Carmignac

Notable portfolio moves

  • Reshuffling the Chinese portfolio
    • Profit taking on top performing stocks (Miniso, New Oriental);
    • Exits: ENN Energy and Alibaba;
    • Additions: VIPSHOP and JD.com;
  • Increase of LatAm exposure
    • Adding a new Mexican industrial real estate company, Inmobiliaria Vesta, a key beneficiary of Nearshoring.
  • Profit taking on Asian Tech/ Semi names:
    • Selling of Tokyo Electron;
    • Increased weighting of TSMC and Samsung, key beneficiaries of the AI revolution not being fully reflected in their stock prices.
  • Addition to India:
    • Increase weighting of the Indian Bank Kotak Mahindra with appealing valuations after the Q1 sell off.

Outlook and positioning

For the remainder of the year, we maintain a constructive view on emerging markets, against backdrop of attractive valuations and the secular growth trends we see across EM (AI revolution, Nearshoring).

  • Concentrated portfolio: We have a concentrated portfolio with 35 holdings, and the ten biggest holdings make up 51% of the Fund’s assets, with particular attention paid to valuations. This high concentration reflects our desire to focus on those companies with our strongest conviction level and strongest fundamentals in this extremely uncertain market climate.

  • Increased focus on bottom-up fundamentals & valuations: In a rising rate environment, financial health and valuation continue to be primary considerations for us, as evidenced by our top 10 positions, which are made up of stocks for which we have a lot of confidence on valuation. We are convinced that our highly selective approach, coupled with the strength of our portfolio companies’ balance sheets, should enable us to outperform at a time when interest rate hikes by the main central banks are making things difficult for investors.

  • A strong focus on sustainability in line with our Article 9 mandate: our sustainability guidelines and objectives remain a primary focus for the Fund. Through each investment, we aim to contribute to UN Sustainable Development Goals (SDGs), while also achieving carbon emissions 50% below our reference indicator.

Performance drivers for months to come

Strong conviction in Asian Tech names: we continue to see a lot of value on the Asian tech and semiconductor names that are one of the main beneficiaries of the AI revolution that drove up the stock prices of US companies like Nvidia and Microsoft but isn’t yet reflected in Asian companies’ prices such as TSMC or Samsung Electronics despite their unique expertise & dominant market shares in their respective markets.

Increased allocation to Latin America: In order to take advantage of the Nearshoring trend in Mexico and the improving fundamentals in Brazil, we have stepped up our exposure to Latin America (19% of Funds net assets versus 10% for the ref. indicator). We are positioned on the industrial real estate sector in Mexico (Vesta) and key infrastructure and utilities companies in Brazil (Equatorial).

Selective opportunities in China: maintaining our decent allocation to the Chinese markets (37% of net assets), to take advantage of the growth potential of solid balance sheet consumer companies that are trading at prices that don’t fully reflect their underlying fundamentals and growth prospects.

  • In China, our approach is centered on bottom-up stock selection, focusing on company fundamentals and valuations.

  • Almost all the Chinese companies in our EM portfolios are leaders in their sector, with strong cash flow profile and solid balance sheet, benefiting from the large amount of cash they are able to deploy to boost their market share and solidify their market-leading position following the gradual normalization of the economy post-reopening, while their weaker competitors have exited the market or are struggling.

  • On the contrary, we try to avoid cyclical companies (banks, property developers, materials and energy companies) that seem vulnerable in the current environment.

Carmignac Portfolio Emergents

Grasping the most promising opportunities within the emerging universe

Discover the fund page

Carmignac Portfolio Emergents F EUR Acc

ISIN: LU0992626480

Recommended minimum investment horizon

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Main risks of the Fund

EQUITY: The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization.

EMERGING MARKETS: Operating conditions and supervision in "emerging" markets may deviate from the standards prevailing on the large international exchanges and have an impact on prices of listed instruments in which the Fund may invest.

CURRENCY: Currency risk is linked to exposure to a currency other than the Fund’s valuation currency, either through direct investment or the use of forward financial instruments.

DISCRETIONARY MANAGEMENT: Anticipations of financial market changes made by the Management Company have a direct effect on the Fund's performance, which depends on the stocks selected.

The Fund presents a risk of loss of capital.

Carmignac Portfolio Emergents F EUR Acc

ISIN: LU0992626480
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 (YTD)
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Year to date
Carmignac Portfolio Emergents F EUR Acc +6.45 % +3.92 % +1.73 % +19.76 % -18.22 % +25.53 % +44.91 % -10.29 % -14.35 % +9.79 % +4.64 %
Reference Indicator +11.38 % -5.23 % +14.51 % +20.59 % -10.27 % +20.61 % +8.54 % +4.86 % -14.85 % +6.11 % +5.22 %

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3 Years 5 Years 10 Years
Carmignac Portfolio Emergents F EUR Acc -4.45 % +8.12 % +5.46 %
Reference Indicator -2.43 % +4.09 % +5.03 %

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Source: Carmignac at 31/05/2024

Entry costs : We do not charge an entry fee. 
Exit costs : We do not charge an exit fee for this product.
Management fees and other administrative or operating costs : 1,32% 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 : 0,37% 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.
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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 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.

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