Carmignac Portfolio Human Xperience: Letter from the Fund Manager
![[Management Team] [Author] Ejikeme Obe](https://carmignac.imgix.net/uploads/NextImage/0001/18/%5BManagement-Team%5D-Ejikeme-Obe.png?auto=format%2Ccompress&fit=fill&w=3840)
During the fourth quarter of 2023, the return of Carmignac Portfolio Human Xperience (A share class) was 6.22%. This compares to a return on the fund’s reference indicator of 6.42% over the same period, meaning that for the calendar year the fund rose +22.62%, and above its reference indicator which rose +18.1%.
Market environment during the period
Global equity markets had a positive year, with continued positive momentum. Initially, the positive momentum was driven by the possibility of a cessation of interest rate rises due to falling headline inflation. Later, the ongoing resilience of the US economy pushed expectations of a recession to later in the year or even into 2024. Global markets rose significantly in the final quarter responding to an unequivocally dovish message from central banks, notably the US Federal Reserve (the Fed), that inflation is now under control and that we can look forward to interest rate cuts in 2024. The S&P 500, known for its focus on growth, outperformed other major equity indices over the period, marking its best quarterly performance in three years. Throughout the year, the dominant force behind the index's returns was the 'magnificent seven' tech and artificial intelligence (AI) stocks, which accounted for approximately 80% of the overall returns.
The third quarter was dominated by rising bond yields and hawkish commentary from the Fed, which created downward pressure on Technology and Consumer Staples stocks. In the final quarter, global markets rose in response to a dovish message from central banks, with expectations of interest rate cuts in 2024, thus reversing the narrative of the prior quarter. The markets continue to be confident that central banks had completed their rate hikes, but remain cautious about the duration of restrictive interest rates and the potential impact on the stock market.
How did we fare in this context ?
During the year, the Fund recorded a positive absolute and relative performance. The main performance came from stock selection. Information Technology, Healthcare, and Consumer Discretionary were the best contributing sectors to our fund.
The beginning of the year was driven by resilient consumer data in the US, falling energy prices in Europe and expectations of falling inflation. The rally was led by the Information Technology sector with our best contributor during the year, Nvidia, climbing more than 90% on the quarter propelled by the fervour around artificial intelligence (AI).
The second quarter was very strong for two of our Healthcare holdings. Eli Lilly and Novo Nordisk, who both provide the new GLP-1 drugs to treat diabetes and obesity, rising 60% and 50% respectively during the year, driven by strong sustained growth from their leading products, a trend which we see likely to last for decades.
Even if the third quarter was dominated by hawkish commentary from the Fed creating downward pressure on relatively highly rated stocks in the Technology and Consumer Staples sectors, as well as heightened concern for highly indebted companies such as those in the Utility and Real Estate sectors, we were under exposed to these areas, which was supportive for our Fund. The best performer in the quarter was Technology driven by extremely bullish statements from Nvidia around the impact on future chips sales to meet the growing demand for artificial intelligence applications (AI). Microsoft, which is a top 10 holding and contributor over the period, was also a major beneficiary – not just because of its stake in OpenAI, but because its current software should benefit from AI functionality becoming embedded in future years cementing their competitive position and their pricing.
In the last quarter, economically sensitive areas like Industrials, Commodities, and Technology performed well, along with sectors sensitive to falling rates like Utilities and Real Estate. Costco, which is one of our top 10 holdings and has a strong CHX Score of 12/100, performed exceptionally well in the last quarter, with a 22% increase. Additionally, Intel, a technology company ranked 32 out of 700 on the Forbes World's Best employer ranking, demonstrated the importance of a strong customer and employee score with a remarkable performance of 42% during the period which further validates our approach and strategy.
Outlook
We maintain a cautious stance on economically sensitive sectors, such as Energy, Materials, Industrials, and Financials/Banks, and have chosen to maintain an underweight position in these sectors. Additionally, we have decided to maintain our overweight exposure to Consumer Staples, as we believe they will serve as a defensive position during periods of economic uncertainty. This prudent strategy is expected to contribute positively to our performance in 2024.
Carmignac Portfolio Human Xperience
A thematic fund focused on customer and employee experienceDiscover the fund pageCarmignac Portfolio Human Xperience 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
- 1,80% 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 Human Xperience | 19.2 | -21.8 | 22.6 |
| Reference Indicator | 17.2 | -13.0 | 18.1 |
| Carmignac Portfolio Human Xperience | + 18.4 % | + 5.4 % | + 7.2 % |
| Reference Indicator | + 25.0 % | + 9.4 % | + 10.4 % |
Source: Carmignac at 30 Sep 2024.
Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor).
Related articles
Carmignac launches Tech Solutions Fund to seize next wave of tech innovation
Carmignac Portfolio Human Xperience celebrates its three-year anniversary
![[Article image] [Flash Note] Blue bridge](https://carmignac.imgix.net/uploads/article/0001/01/Main_Investing_savings-2.jpg?auto=format%2Ccompress&fit=fill&w=3840)
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.
Morningstar Rating™ : © Morningstar, Inc. All Rights Reserved. The information contained herein: is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
Access to the Funds may be subject to restrictions regarding certain persons or countries. This material is not directed to any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the material or availability of this material is prohibited. Persons in respect of whom such prohibitions apply must not access this material. 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 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, 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.
The Management Company can cease promotion in your country anytime.
Investors have access to a summary of their rights in English on the following links: UK ; Switzerland ; France ; Luxembourg ; Sweden.