Making a difference through emerging markets

When Carmignac was founded in 1989, we became one of the first players to invest in emerging markets.

Over the years, we have successfully developed a unique and distinctive approach in order to detect market opportunities. This has allowed us to build up solid expertise in the EM universe, as can be seen in the development of a specialised fund range equipped with both new performance drivers and enhanced diversification, active across all asset classes.

This track record and the trust of our partners have seen our EM range grow to almost EUR 7 billion in assets under management¹ .

We view adopting environmental, social and governance criteria as an essential part of appropriately managing risk in light of the financial implications of ESG matters.

Moreover, we believe it is our responsibility to make a positive contribution to society and the environment over the long term and to prioritise adding value for our clients. That’s why we have always incorporated ESG considerations into our analyses. We have never invested in the tobacco or weapons sectors, for example.

However, we have strengthened our approach* and formalised our sustainable investment philosophy in recent years:

Our approach to emerging markets reflects our determination to invest sustainably. Our management teams seek to fully understand the risks inherent in emerging countries by combining analysis of fundamentals with consideration of non-financial criteria. We take care to examine the macroeconomic fundamentals of each security and carry out site visits to ensure a thorough investigation, and we also rely on a proprietary ESG analysis tool called START⁴ . This tool, which is at the heart of our process, allows us to offer unique human insight and engage companies in dialogue about key indicators.

In addition to this preliminary stage, we have also used specific approaches to take our sustainability efforts one step further. Within our EM equities funds, for example, we ensure we are having a positive impact on society and the environment through measures such as aligning ourselves with the Sustainable Development Goals (SDG) defined by the United Nations. Several SDG are particularly relevant for emerging countries. Challenges such as “No poverty”, “Zero hunger” and even “Affordable and clean energy” have often already been met within developed countries.

For our EM fixed-income investments, we have taken steps such as introducing a proprietary ESG rating tool for sovereign debt, along with a specific model for EM debt. Our dynamic analysis therefore allows us to assess developing countries’ positive trajectory in relation to the E, S and G pillars as well as the inherent risks. For each pillar, we focus on qualitative data such as the share of renewable energy for the environment pillar, GDP per capita for the social pillar and human rights for the governance pillar.

We are also convinced that emerging markets have a decisive role to play in responsible investment. The energy transition cannot happen without emerging countries, and nations including China, South Korea and India have emerged as major players in the fields of innovation and green technology.