Carmignac Patrimoine: The advantages of investing across the capital structure
In the end, it all comes down to where we think the risk/reward profile is best for us
Asset allocation funds are a turn-key solution for clients looking for diversification, with investments in different asset classes.
Clients expect such funds to have a balanced allocation between equities and bonds, with cash as the adjustment variable. This typically leads them to consider these types of funds as two separate investment pockets. This is particularly tempting when two Funds managers with two distinct market expertise manage the Fund.
However, an asset allocation fund can really stand out if the Fund managers think of the portfolio construction as a whole, and leverage on each other’s perspective with an unconstraind approach.
How our diversification process stand out from others?
Since they manage the Fund together, Rose Ouahba and David Older have spent a lot of time thinking about how the different components of the Fund could fit together from a risk perspective and how they can make the most of the various performance drivers at their disposal. In this regard, close contact between the equity and fixed income teams is essential.
Optimizing the asset allocation and risk management
In the midst of the Covid crisis, we were seeing huge dislocations in the credit market and naturally wanted to hedge our exposure. We used credit derivatives, but to be even more agile, part of Beta of the credit book was hedged by calibrating some short positions on European equity indexes. Indeed, they have a strong correlation to credit in down markets, are highly liquid and easy to implement.
Investing across the capital structure at the bottom-up level
In order to gradually increase the cyclicality of Carmignac Patrimoine, a new thematic emerged in April/May with future beneficiaries of the reopening of economies. From this point of view, the indiscriminate sell-off of the travel industry has created some attractive entry points on some issuers. Nevertheless, such companies are not necessarily attractive in terms of both equity and debt.
However, their high tangible assets (namely planes) act as collateral for the cash they’re raising, making our credit team confident about their ability to refinance themselves and reimburse their debt over the mid-term. On the equity side, we have a preference for asset-light companies like the leading Spanish travel ticketing software platform.
Optimizing the sector allocation across the capital
Years of financial repression have kept interest rates at extremely low levels, substantially denting on banks’ profitability. In the meantime, tighter regulation has forced these institutions to increase their core tier 1 ratio (key measure of a bank's financial strength that has been adopted as part of the Basel III Accord on bank regulation), effectively making them more resilient to systemic risks.
Conversely, we have invested in subordinated debt of firmly rooted banking players in Europe (so-called national champions), inferring that fiscal and monetary support would continue.
Since the beginning of the year, Carmignac Patrimoine A EUR share class posted +7.8% vs +2.6% for the reference indicator1. It beats 96% of its peers2 since the beginning of the year.
Performance
| Carmignac Patrimoine | 3.9 | 0.1 | -11.3 | 10.5 | 12.4 | -0.9 | -9.4 | 2.2 | 7.1 | 3.3 |
| Reference Indicator | 8.1 | 1.5 | -0.1 | 18.2 | 5.2 | 13.3 | -10.3 | 7.7 | 11.4 | 1.7 |
| Carmignac Patrimoine | + 3.1 % | + 3.1 % | + 0.7 % |
| Reference Indicator | + 4.2 % | + 5.7 % | + 5.3 % |
Source: Carmignac at 28 Feb 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: 40% MSCI AC World NR index + 40% ICE BofA Global Government index + 20% €STR Capitalized index. Quarterly rebalanced.
Carmignac Patrimoine E EUR Acc
- Recommended minimum investment horizon
- 5 years
- Risk indicator*
- 3/7
- 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
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Carmignac Portfolio Patrimoine Europe: Letter from the Fund Managers
Carmignac Patrimoine: Letter from the Fund Managers