Carmignac Portfolio Patrimoine

The month was characterized by a cautious market environment, with investors balancing optimism about economic growth against concerns about inflation and monetary policy. Nevertheless, the year proved to be extremely favorable for risky assets, particularly in the United States.

In December, although the Fed and the ECB cut their key rates, they indicated that they would remain vigilant, albeit for different reasons. The Fed was cautious due to persistent uncertainty about inflation in the United States, while the ECB was concerned about growth in Europe.

In response to the Fed's cautious stance on inflation, interest rates rose again, with a steepening of the yield curve reflecting the fears of central bankers.

In equities, US markets fell, while European and Asian markets recovered. However, cyclical sectors were particularly hard hit, while growth sectors performed well.

The Fund's performance was slightly positive this month, outperforming its benchmark, which experienced a decline.

In a bear market for equities, our stock selection and option strategies helped to mitigate some of the losses.

We observed an increase in our major technology holdings, particularly TSMC, Amazon, and Alphabet, along with a significant surge in Broadcom following the announcement of its AI-boosted results.

In the fixed income sector, our cautious approach to sovereign rates, characterized by zero sensitivity and steepening strategies, as well as our exposure to nominal rates, proved to be advantageous.

Similarly, our exposure to credit was beneficial.

Regarding currencies, the outperformance of the dollar slightly impacted the fund's relative performance, but this was offset by our exposure to US rates.

As we move into 2025, we are adopting a more selective approach to US exceptionalism. With US growth expectations potentially reaching their peak, we are shifting our focus from highly valued US equities to diversifying our investments into European and emerging markets.

In the bond market, we are transitioning from a negative stance on US duration to a more neutral position, while still anticipating a steepening of the yield curve. The market currently expects fewer than two rate cuts over the course of the year. Consequently, US Treasuries can serve as an effective hedge against risky assets in the event of an unexpected macroeconomic downturn.

We are also maintaining our strategies involving inflation-linked and break-even securities, as we believe the market remains overly optimistic about the long-term trajectory of inflation.

Additionally, we continue to maintain exposure to credit due to its attractive yield and the visibility of its performance.

To enhance the overall structure of our portfolio, we have implemented several decorrelation strategies, including exposure to emerging local rates, gold companies, South American currencies, and the yen.