Withstanding market challenges for five years: a celebration of our UK OEIC range

Since we entered the UK market in 2012, we have continued to build and develop our propositions to meet the needs of our investors. One of our main priorities was to provide our clients with easy and convenient access to our investment strategies through a UK domiciled wrapper, available across the multitude of platforms they may use, and we successfully launched our range of OEIC funds in 2019.

Five years have passed since then, marked by several geopolitical events that have influenced investment markets. From emerging, global, and European markets, our equity and fixed income strategies have proven their ability to seize long-term opportunities, regardless of the different conditions influencing market behaviour.

To celebrate this, our Fund Managers highlight one of the key challenges they have faced over the past 5 years* and describe how our Funds have remained resilient.

*For all OEIC Funds except FP Carmignac Global Equity Compounders.

We have invested in emerging markets since the creation of Carmignac in 1989 and this conviction has become stronger during the last decades, despite the many challenges faced in over 30 years. Since the launch of FP Carmignac Emerging Markets, the Fund faced a hostile top-down environment, first with the Russia Ukraine war that led to a sharp increase in commodity prices and the strong rally in oil and gas companies to which we had no exposure in the Fund. In the aftermaths of the invasion, higher commodities prices led to higher inflation, forcing central banks to raise interest rates. This proved detrimental to the performance of growth companies, that tend to be long duration assets, at the benefit of value names. Our Fund has a quality growth bias suffered from the combination of these two factors.

Thanks to our disciplined investment process and tailor-made tools, we were able to identify these changes and reacted very quickly by deploying more capital to Latin America, and by increasing the weighting of quality companies that were trading with very depressed valuations. This efficient risk management has allowed our strategy to outperform not only its comparator benchmark, but also its peers over the past 24 months and over the past 5 years, our investment horizon.

Our conviction for emerging markets keeps getting stronger through the years and we will continue to find attractive investment opportunities in this universe.

In our search for quality and innovative companies that demonstrate long-term profitability, Europe’s healthcare sector has presented a promising investment opportunity since the launch of FP Carmignac European Leaders. As bottom-up, active and conviction driven investors, we see the healthcare sector as rich in diverse businesses with European companies being global leaders. From core pharma companies to biotech innovators, we also invest in B2B suppliers of products and services to other healthcare companies as well as medical technology companies which by nature will have a more consumer focused profile.

One of our strongest convictions has been treatment for diabetes and obesity. By 2030 over 1.2 billion adults will be obese⁴, and currently over 500 million people worldwide are living with diabetes, 5 times more than in 1980⁵. We believe that the obesity market has the potential to reach $100bn in peak sales by the early 2030s and positioned ourselves early in this trend, investing in Novo Nordisk - the Global leader and pioneer in obesity treatments - since the launch of our Fund.

Our search for attractive and sustainable trends in Europe continues unabated, and we will continue to look for quality companies across innovative sectors.

Since its launch, FP Carmignac Global Bond has offered a flexible allocation to rates, credit, and currencies, the main drivers of its performance. One of the main highlights of the last few years came in 2022, a remarkable one for fixed income markets and the Fund. Despite the challenging market conditions during this period, the Fund's drawdown was relatively contained and its year-end performance for 2022 was -2.5%, compared to -11.8% for its comparator benchmark⁷. We achieved that by strategically minimizing exposure to corporate credit and risky assets globally, using high levels of hedges, due to tight credit spreads before the Federal Reserve's rate. Active currency management, particularly focusing on the USD, also helped mitigate this drawdown.

FP Carmignac Global Bond will continue to combine flexibility with an opportunistic and active unconstrained philosophy to harness macroeconomic trends across the fixed income world.

For an equity fund, particularly one focused on quality, time is a significant asset that allows companies to benefit from the compounding effect. Indeed, thanks to their strong fundamentals and innovative abilities, quality companies have been able to adapt to market changes and remain competitive over time.

Over the past few years, FP Carmignac Global Equity Compounders has experienced only one challenging situation, mainly due to the resurgence of inflation, which led to higher interest rates and a decline in the valuations of our investments. This sector rotation weighed on quality, but the Fund managed to navigate this period swiftly and resume its upward trajectory, as evidenced by its performance since the end of 2022. Furthermore, the inflationary pressure seems to be gradually deflating, resulting in the diminishing headwind on quality stocks.

Our approach is set to remain resilient over the long term, aiming to help investors build sustainable capital that will benefit not only themselves, but also future generations.