Carmignac Portfolio Grandchildren: Reinvesting to reinvent ourselves
Just as investors need to rethink and optimise their long-term investment strategies in response to societal issues and changing lifestyles, so too do companies need to be able to reinvent themselves in order to cope with changes in the business cycle, so that they can prosper and thrive over time. This is where the idea of reinvestment comes in.
By reinvesting in their businesses, companies can nurture their capacity to innovate and develop so that they can maintain their competitive advantage over the years – and hence their profit margins. In this way, reinvestment is also an effective indicator when it comes to selecting stocks and building a solid equity portfolio over the long term. Carmignac Portfolio Grandchildren seeks to leverage this by focusing on characteristics that we believe are essential for companies to prosper over time.
Reinvestment: a growth catalyst for companies
First, it’s important to note that profit generation is a prerequisite for any kind of reinvestment. Second, the decision of how to allocate profits is a major strategic one: should profits be retained to meet future challenges, paid out to shareholders, or reinvested to strengthen the company’s growth prospects?
Why choose reinvestment?
Improved profitability
Reinvesting helps to improve a company's profitability, particularly through the productivity gains resulting from productive investment. This can include automating processes and raising employee training standards, which tend to boost competitiveness in the long term.
Stronger organic growth
Reinvesting also strengthens a company's organic growth. Whether the funds are spent on R&D, prospecting to penetrate new markets, or marketing to raise brand awareness, this can ultimately lead to higher revenues.
Self-financing as a priority
Reinvesting profits indicates that a company prefers self-financing over the use of external financing, such as loans or share issues, in order to ensure a certain degree of financial independence or even to make counter-cyclical investments. In addition, the more restrictive monetary policies pursued in the US and Europe since 2022 have increased the cost of external financing, further justifying the choice of self-financing.This non-exhaustive list of the benefits of reinvestment illustrates that companies adopting this strategy are more flexible and resilient and better able to explore new avenues of development in order to evolve and reinvent themselves, regardless of the business cycle and long-term market conditions. Furthermore, deciding to reinvest demonstrates that the company's management is confident about its business strategy. These are valued qualities and enable a company to remain competitive over time, steadily establishing itself as a market leader and attracting more investors over the long term.
Reinvestment: the key to a solid portfolio
Investing in companies that prefer to reinvest a large proportion of their profits has many advantages when it comes to enhancing the quality of equity portfolios. Companies with high reinvestment rates have shown to outperform the stock market over the long term thanks to characteristics that are unique to them.
Valuation premium
Reinvesting profits rather than simply paying them out can help to create lasting value. This often results in companies with higher valuation multiples that reward management's long-term vision.Long-term vision
A company that reinvests cares about its future and looks ahead to future challenges. This approach enables sustainable growth. Portfolios invested in these companies have a certain degree of resilience against changing market conditions.Sustainability
A long-term vision generally comes hand in hand with a sustainable approach, offering solutions that ensure a company's financial health. Such a vision is often accompanied by positive social impacts, such as through the creation of jobs to support business growth and consequently generate income.Companies that reinvest their profits not only create value, but are also more resilient to economic challenges. Focusing on these companies can generate solid portfolio performance over the long term.
Capitalising on leaders with a solid past and promising future
In the light of these undeniable advantages, Carmignac has forged solid convictions in companies that reinvest. One such company is Hermès, which was part of our Carmignac Portfolio Grandchildren portfolio at end-November 2024. Hermès was founded 187 years ago and has consistently risen to challenges, enabling it to endure over time.
Hermès, a French craftsman keeping up with the times
"Hermès creations are designed to last, to be repaired, and to be passed on.”
Hermès, founded in 1837, is a French luxury goods firm that initially specialised in the manufacture of harnesses and saddles. Today, it’s renowned for its top-of-the-range handcrafted creations, such as Birkin bags and silk squares. Its success is based on a prestigious heritage, but also on a visionary reinvestment strategy. Unlike some companies in the sector that focus on rapid growth, Hermès has chosen to consistently reinvest its profits in innovation, craftsmanship, and sustainable development.
Over the years, Hermès has established itself as a world leader in high-end craftsmanship, making its workshops a place of innovation and lasting heritage.
Carmignac Portfolio Grandchildren: reinvesting to create a lasting legacy
Leveraging the benefits of companies that reinvest is a cornerstone of the Carmignac Portfolio Grandchildren investment process.
Carmignac Portfolio Grandchildren is an international equity fund focused on developed markets. It invests in what we consider to be quality stocks – i.e. companies with high, sustainable profit margins that reinvest their profits. The Fund applies strict sustainability standards, enabling it to be classified as an SFDR Article 91 fund. Stock selection is based on two key criteria: companies must have high, stable profit margins and a propensity to reinvest their profits. The Fund’s performance over 20+ years has proven the effectiveness of these metrics for an equity market investment strategy, as reflected in the solid return that Carmignac Portfolio Grandchildren has delivered since inception.
Source: Carmignac, data at 29/11/2024. Benchmark: MSCI World (USD, net dividends reinvested). Returns net of fees for A Acc Eur units. Past performance is no guarantee of future performance.
For investors looking for a long-term investment solution, Carmignac Portfolio Grandchildren stands out for its distinctive approach. It’s not simply a matter of investing in promising trends, but also of identifying the companies that shaped those trends – both in the past and out into the future.
Carmignac Portfolio Grandchildren
An intergenerational Fund focused on quality, sustainable companiesView the Fund’s pageCarmignac Portfolio Grandchildren A EUR Acc
- Recommended minimum investment horizon
- 5 years
- Risk indicator*
- 4/7
- SFDR - Fund Classification**
- Article 9
*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
- 1,70% 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
- 0,26% 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 Grandchildren | 15.5 | 20.3 | 28.4 | -24.2 | 23.0 |
| Reference Indicator | 15.5 | 6.3 | 31.1 | -12.8 | 19.6 |
| Carmignac Portfolio Grandchildren | + 6.0 % | + 12.5 % | + 14.0 % |
| Reference Indicator | + 11.1 % | + 13.4 % | + 14.8 % |
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).
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35 years in the global equity arena, many more ahead
Carmignac Portfolio Grandchildren awarded for its sustainable approach
Marketing communication. Please refer to the KID/prospectus of the Fund before making any final investment decisions.
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?locale=en. The decision to invest in the promoted fund should take into account all its characteristics or objectives as described in its prospectus. 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. 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. The portfolio of the fund is subject to change without notice. Access to the Funds may be subject to restrictions regarding certain persons or countries. 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 Management Company can cease promotion in your country anytime. The risks, fees and ongoing charges are described in the KID. The KID must be made available to the subscriber prior to subscription. The Funds’ prospectus, KIDs, NAV and annual reports are available at www.carmignac.com, or upon request to the Management Company. Investors have access to a summary of their rights in English at section 6 of "regulatory information page" on the following link: www.carmignac.com. Carmignac Portfolio Grandchildren refers to the sub-funds of Carmignac Portfolio SICAV, an investment company under Luxembourg law, conforming to the UCITS Directive. 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.
- 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, succursale de Nyon/Suisse, Route de Signy 35, 1260 Nyon.
CARMIGNAC GESTION 24, place Vendôme - F-75001 Paris - Tél : (+33) 01 42 86 53 35 Investment management company approved by the AMF Public limited company with share capital of € 13,500,000 - RCS Paris B 349 501 676.
CARMIGNAC GESTION Luxembourg - City Link - 7, rue de la Chapelle - L-1325 Luxembourg - Tel : (+352) 46 70 60 1 Subsidiary of Carmignac Gestion - Investment fund management company approved by the CSSF.
Public limited company with share capital of € 23,000,000 - RC Luxembourg B 67 549.