P R O F E S S I O N A L S O N LY. Quarterly Meeting 3 rd quarter 2018

Transcription

1 P R O F E S S I O N A L S O N LY Quarterly Meeting 3 rd quarter 2018

2 Didier Saint-Georges Managing Director, Member of the Investment Committee 2

3 US Equity Markets: Sector Performances Since the Beginning of the Year S&P 500 Index 9,0% Technology Consumer discretionary Healthcare Energy Industrials Utilities Real Estate Finance Communication Materials Consumer staples 0,0% -1,0% -1,2% -3,3% -4,2% -5,5% 5,2% 3,3% 15,2% 19,5% 19,5% 3 Source: Carmignac, Bloomberg, 28/09/2018

4 Chinese Equity Markets: Sector Performances Since the Beginning of the Year -14,7% Shanghai Shenzhen CSI 300 Index -31,5% -18,8% -20,4% -20,9% -26,6% -2,9% -4,7% -7,4% -11,6% 1,0% Healthcare Energy Utilities Consumer staples Finance Consumer discretionary Materials Industrials Technology Telecoms 4 Source: Carmignac, Bloomberg, 28/09/2018

5 Carmignac Patrimoine: Performance Attribution Since the Beginning of the Year (%) Net performance: -4.01% 4.1% 0.2% LONG TERM CONVICTIONS US EQUITIES, HIGH VISIBILITY STOCKS CREDIT -5.5% TRUMP COLLATERAL EFFECTS (DOLLAR, EMERGING, COMMODITIES, GOLD, CHINESE TECH) -1.7% OTHER 5 Source: Carmignac, 28/09/2018 Performance shown on the graph are gross figures and do not include fees Past performance is not a reliable indicator of future performance.

6 Performance of our Fund Range During the Third Quarter EQUITY range PATRIMOINE range FIXED INCOME range Global C. Investissement -2.61% C. Patrimoine -2.79% C. Investissement Latitude -2.66% C. Portfolio Unconstrained Global Bond -0.51% C. Portfolio Capital Plus +0.02% Europe C. Portfolio Grande Europe -0.44% C. Euro-Entrepreneurs +0.37% C. Long-Short European Equities -0.50% C. Sécurité -0.41% Emerging C. Emergents -3.72% C. Portfolio Emerging Discovery +0.76% C. Portfolio Emerging Patrimoine -3.28% Thematic C. Portfolio Commodities -3.33% 6 Source: Carmignac, 28/09/2018 Past performance is not a reliable indicator of future performance. Performance is shown net of fees (excluding any entry charges payable to the distributor). All the fund performances shown are those of A EUR accumulation units A green icon represents positive Fund performance relative to the reference indicator, while an amber icon represents negative Fund performance relative to the reference indicator.

7 Frédéric Leroux Global Fund Manager, Head of Cross Asset Team 7

8 America First! But at What Cost? 8

9 United States: The Economic Policy «Miracle» 9% 7% 5% 3% 1% -1% -3% -5% Libor 3-month real rate United States: consumption Household revenue growth expectations United States: investment Investment outlook over 6 months (Fed surveys), 4 months advanced Non-residential investments (yoy %) 9 Source: Carmignac, Datastream, 09/2018

10 United States: An Unusual Timing in the Economic Cycle for a Fiscal Stimulus Fiscal stimuli & Output gap 4,0 2,0 0,0 Economic recovery act 1981 Output Gap Trump tax plan -2,0-4,0-6,0-8,0 Recession periods Fiscal reform 1986 Bush tax cut 2001 Bush tax cut 2003 American recovery act Source: Carmignac, 09/2018

11 United States: Growth Robustness is Having its First Effects on Inflation United States: inflation United States: wage pressure Inflation (Core PCE*, %yoy) Wage growth (Atlanta Fed) Leading indicator on inflation (computed by the New York Fed) Prime age employment/ population ratio (4-months advanced) 11 Source: Carmignac, Datastream, 09/2018 *The Core PCE Price Index is a consumer price index that excludes food and energy

12 United States: Overheating Risks are Threatening Wealth Effects 21% 19% 17% 15% 13% 11% 9% 7% 5% 3% United States: company profitability Gross margins Net margins Household confidence on housing market United States: housing market Existing home sales 12 Source: Carmignac, 09/2018

13 It s Getting Late Mr. Powell 8% 6% 4% 2% 0% -2% -4% -6% Taylor rule Fed s fund rates adjusted to its balance sheet Taylor rule* US credit growth US non financial corporate debt growth (%yoy) Banking credit conditions 13 *Taylor s rule is a proposed guideline for how central banks, such as the Federal Reserve, should alter interest rates in response to changes in economic conditions. Source: Carmignac, Bloomberg, 09/2018

14 The United States and the Rest of the World 14

15 The Tightening Continues Annual change in the main central banks balance sheets ($Bn) $Bn Projections FED ECB BOJ Total 15 Source: Carmignac, Bloomberg, 09/2018

16 Monetary Tightening and Repatriation Create a Biased Situation in Favour of the United States $Bn US Share buybacks $Bn Foreign earnings retained abroad Cash Repatriation (1-year rolling) Source: Carmignac, 09/2018

17 Emerging World 17

18 China: The Protectionist Threat is Weakening an Economy with an already Feeble Domestic Demand China: consumption and investment growth Retail sales (%yoy) Urban Fixed Asset Investments (%yoy) 18 Source: Carmignac, Datastream, 08/2018

19 China: A Rate-Cut Stimulus Would Exacerbate Capital Outflows But other ways exist 5% 4% China: international dynamics $Bn China: capital outflows China-US 5-year swap differential 3% 2% Current account, in % of GDP 1% 0% -1% Net foreign direct investments, in % of GDP Capital outflows 19 Source: Carmignac, Bloomberg, 09/2018

20 Eurozone 20

21 Eurozone: ECB Stuck Between Inflation and Decelerating Growth Eurozone: GDP growth (quarterly) Eurozone: inflationary pressure 1% Real GDP 5% Labor cost Index 0% 4% 3% -1% -2% GDP leading indicator (proprietary model) 2% 1% Regressed on unemployment and hiring intentions (proprietary model) 21 Source: Carmignac, 09/2018

22 Europe: An Economic Slowdown in 2019 Would Reinforce Political Risks for Markets Rise of nationalism in Europe 22 Source: BBC, 09/2018

23 Investment Strategy 23

24 Investment Strategy: Same Reasons, Same Effects 3,5% 3,0% 2,5% 2,0% 10-year US rates US: relative performance vs the rest of the world MSCI USA 1,5% 1,0% 100 MSCI World ex-usa /16 10/16 07/17 04/18 24 Source: Carmignac, Bloomberg Left: 12/10/2018 Right: 28/09/2018

25 Investment Strategy: Towards an Interest Rate Regime Shift 16% 10-year US rates 14% 12% 10% 8% 6% 4% 2% 0% 25 Source: Carmignac, Bloomberg, 12/10/2018

26 Number of stocks upgraded / Number downgraded Biggest Losers: Leveraged Cyclical Stocks Sentiment towards global earnings peaked in January Both cyclical and leveraged: this cycle s biggest losers Weekly Earnings Revision Ratio (ERR) 3-week Rolling Average ERR MSCI World 100 Average Earnings Revision Ratio Basket of leveraged cyclical stocks Source: Carmignac, Left: 09/2018 Right: 19/10/2018

27 Equity Markets: Similarities with the 60 s 60 s: S&P500 EPS* growth US 10-year yield (RHS) United States: 60 s S&P 500 (LHS) Inflation (CPI)- RHS 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% -1% 8% 9% 13% 15% 11% 2% 1% 5% 7% -9% -10% -18% % US corporate profits and output gap 11% 29% 18% 27 Non-financial corporate profits Output gap, 12-month advanced Source : Left: Bloomberg, 10/2018 Top: Bloomberg, 31/03/1969 Bottom: Carmignac, 09/2018 EPS: earnings per share

28 Nifty Fifty : a Bubble? «Nifty Fifty» average P/E Jan Oct ,5 S&P500 P/E 19 16,8 10-year U.S. rates 6.9% 3.19% Jan : «Nifty Fifty» - P/E Walt Disney 82 Intel. Flavors & Frag 78,2 McDonald s 72,5 Baxter Intl. 71,8 Avon Products 68,3 Johnson & Johnson 65,2 Xerox 51,7 Coca Cola 50,2 Eli Lilly 49,8 Merck & Co. 48,4 Procter & Gamble 43,5 American Express 39,5 «Nifty Fifty 2.0» Today s "Nifty fifty Examples of Nifty Fifty 2.0 stocks Mastercard Alphabet Celgene Booking Tencent Costco Becton-Dickinson S&P 500 Nasdaq Growth expectations (%) 2019 EPS* Growth 10.5% 10.1% 16.0% Profitability/Leverage Return on equity 31.4% 19.2% 20.4% Net debt to EBITDA Source: Carmignac, Bloomberg, 10/2018 EPS = earnings per share

29 Investment Strategy PERFORMANCE RISK D R I V E RS M A N A G E M E N T US Equity exposure Avoid leveraged cyclical stocks Growth, non-cyclical, non leveraged stocks Specific hedges Negative modified duration to core interest rates Emerging markets opportunities 29 Source: Carmignac, 28/09/2018 Portfolio composition may vary over time.

30 Carmignac Patrimoine: Highly Selective Performance Drivers Portfolio construction 22% 4% NORTH AMERICA (ex. energy & gold) ENERGY CREDIT PERIPH. SOVEREIGN DEBT CORE SOVEREIGN DEBT 17% 9% 4% 10% EMERGING 9% EUROPE 2% GOLD EMERGING DEBT CASH/CASH EQUIVALENT 3% 20% Equities Exposure 0% 50% Investment 0% 50% Currency exposure USD 0% 100% EUR 0% 100% YEN 0% 100% 30 Modified duration* Source: Carmignac Top: 28/09/2018 Bottom: 14/10/2018 *Modified duration is computed at the fixed income component level and not at the fund s level. Portfolio composition may vary over time.

31 Rose Ouahba Head of Fixed Income Keith Ney Fixed Income Fund manager 31

32 1) The Federal Reserve Determined to Pursue its Monetary Policy Tightening 32

33 Solid Growth Implies Higher Inflation United States: Inflation and Output gap 2% 1,5% 1% 0,5% 0% -0,5% -1% -1,5% -2% 3-year rolling US inflation* (annual change) Output gap 2,5% 1,5% 0,5% -0,5% -1,5% -2,5% -3,5% -4,5% -5,5% -6,5% -7,5% 33 Source: Bloomberg, Carmignac, 31/08/2018 *US PCE : US Personal Consumption Expenditure Index is a US consumer price index

34 Real Yields Have Adjusted Upward 2,5% 2% 1,5% 1% 0,5% 0% US 30-year yields and breakeven 30-year US real yields (left) 30-year US nominal yields (right) US 30-year breakeven (right) 5% 4,5% 4% 3,5% 3% 2,5% 2% 1,5% 1% 34 Source: Bloomberg, 18/10/2018

35 Fed Projections Are Not Yet Priced In by Markets 3,6% 3,4% 3,2% 3% 2,8% 2,6% 2,4% 2,2% 2% 1,8% Fed funds projections by the Fed and the market 3,375 3,125 2,92 2,96 2,92 2,875 2,38 2,375 Markets Fed Median Terminal 35 Source: Carmignac, 18/10/2019

36 The Fed is Reducing its Balance Sheet Fed Inflows annual change (in billion $) Who is buying the US Debt? (in billion $) US Bonds ex-t-bills net Issuance Fed Rest of world 36 Sources: Left: Federal Reserve, October 2018 Right: Bloomberg, 15/10/2018

37 US Long-Term Yields, Adjusted from FX Risk, Are Not Attractive 0,9% 0,6% 10-year yields in core countries after FX hedging for a Japanese investor 0,55% 0,95% Japanese investment in foreign bonds (government and credit) France United-States (RHS) 0,3% 0,08% 0,15% Germany 0,0% 10 yr US 10 yr JPY 10 yr DE 10 yr FR 37 Source: Carmignac, Natwest, 18/10/2018

38 How Equity Markets will Accommodate to a Higher Yield Environment? 2,20% 1,60% 1,00% 0,40% -0,20% -0,80% -1,40% -2,00% United States: real yields and equity/bond correlation 10-year US real yields Neutral Rate Equity/Bond weekly correlation (52 weeks rolling) 80% 60% 40% 20% 0% -20% -40% -60% -80% -100% 38 Correlation calculations based on assets weeklyperformance Source: Carmignac, 30/09/2018

39 Divergence Between US Growth and Rest of the World 65 Manufacturing PMI Index 60 United States Eurozone Emerging Markets Sources: Bloomberg, 30/09/2018

40 Time to Come Back on Emerging Market Debt? EM FX EM Local Debt EM External Debt ,5% 7,0% +57 bps in ,5% +143 bps in % In ,5% 5,5% 70 6,0% /13 08/15 08/17 5,5% 09/13 09/15 09/17 4,5% 09/13 09/15 09/17 40 Source : Bloomberg, 19/10/2018

41 Carmignac Patrimoine: US Positioning MODIFIED DURATION -174 bp CURRENCY EXPOSURE EUR USD 45.4% 39.4% 41 Modified duration is rebased on the fixed income portion and not at the Fund s level. Portfolio may vary over time Source: Carmignac, 19/10/2018

42 2) Europe: Surviving Financial Repression 42

43 Yield Financial Repression: Nowhere to Hide 4 October yr IT 5-7yr IT 7-10yr IT 2 1-3yr IT 1 5-7yr SP 7-10yr SP 0 Deposit rate -1 6m IT 6m SP 6m FR 6m GER 1-3yr SP 1-3yr FR 1-3yr GER 3-5yr SP 3-5yr FR 3-5yr GER 5-7yr FR 5-7yr GER 7-10yr FR 7-10yr GER Effective Duration 43 Source: Bloomberg, 15/10/2018

44 Eurozone Growth Stabilization Above Potential Drives Continued Wage Inflation Eurozone: growth Eurozone: wage inflation 1% 0% 5,0% 4,0% 3,0% Model (uer-nairu, hiring intentions ) Labor cost index Real GDP QoQ% 2,0% -1% Model 1,0% Model (uer-nairu, hiring intent, part-time ) -2% 0,0% 44 Source: Carmignac, 09/2018

45 Bn Post-QE Supply Should Put Pressure on Rates EMU Supply (ex-ecb) in 10yr equivalent 10yr German rate yield 1,2% 1% 0,8% 0,6% 0,4% 0,2% 0% -0,2% 45 Source: Citi Research, 18/10/2018 EMU: Economic and monetary union

46 Not Enough Priced-in «Through Summer» 20 EONIA curve (in basis points) bp-hike priced for Sept bp-hike priced for Feb Source: Bloomberg, 18/10/2018

47 Bund Safe Haven Premium Ought to Reverse 0,2% 0,1% 0% -0,1% -0,2% -0,3% -0,4% Eonia 2y1m 10yr German Sovereign Bond Yield 0,8% 0,7% 0,6% 0,5% 0,4% 0,3% 0,2% 0,1% -0,5% 0% 47 Source: Bloomberg, 18/10/2018

48 Real Yields Hit All-Time Low Negative in May 10y German yield versus 10y Eurozone inflation 4% 3% 10y German real yield 10y German yield 10y EUR inflation 2% 1% 0% -1% -2% 48 Source: Bloomberg, 18/10/2018

49 Benchmark Duration Risk at All-Time High 7,5 Effective Duration - BAML Euro Government Index 7 6,5 6 YTM: 0.97% 5,5 5 YTM: 4.89% 4, Source: BAML All Maturity All Euro Government Index as at 05/10/2018 YTM: Yield to maturity

50 Italian Budget Likely to be Rejected by the Commission Budget deficit (in % of GDP) Government debt / GDP 1% 0,5% 0% -0,5% -1% -1,5% -2% Government projections April % 132% 130% 128% 126% Parliamentary budget office Government projections October ,5% -3% -3,5% Government projections October 2018 Initial draft 124% 122% Government projections April % % Source: Bloomberg, European Commission, Government of Italy, Parliamentary budget office, 18/10/

51 Italian Downgrade to High Yield Largely Priced 4,5% 4% 3,5% 3% 10-years rates vs ratings matrix (average rating) Italy Greece 2,5% 2% 1,5% 1% Spain Portugal 0,5% 0% France Germany AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ 51 Source: Bloomberg, 22/10/2018

52 Greece: Imbalances Have Corrected 4% 0% -4% -8% -12% -16% Greece: Current account & budget deficit Current account (in %) Budget deficit (in %) Reforms rebuilt competitiveness Growth and surplus beating Commission estimates Large cash reserve reduces funding risk Yields penalized by Italian and EM contagion 52 Sources: IMF, ECB, Bloomberg, 30/09/2018

53 Spread (basis points) European CLOs Remain Misunderstood AAA CLO Spread vs itraxx Main index (A-/BBB+) % of loss-making tranches over the past 20 years Global CLOs EMEA ABS,CMBS & RMBS Baa Aaa US CMBS 60 Global CDOs (ex CLOs) Global Structure Finance 0 US Sub-prime RMBS EUR CLO 2.0, AAA Markit itraxx Europe Main 0% 20% 40% 60% 80% 100% 53 Sources: Left: Bloomberg, Citi Global Markets, 18/10/2018 Right: Goldman Sachs, November 2015

54 Portfolio Construction 54

55 Carmignac Sécurité Keith Ney Fixed Income Fund Manager Total MODIFIED DURATION -296 bp KEY FIGURES Cash, T-Bills and bonds < 1 year maturity 33% Core rates Non-core rates Credit YTM Average maturity 0.73% 3.61 years 55 Portfolio may vary overtime Source: Carmignac, 19/10/2018

56 Carmignac Patrimoine -384 bp Total Core rates Non core rates EM rates Credit MODIFIED DURATION EUR USD JPY GBP Asia (ex. Japan) EMEA AUD & CAD Latin America CURRENCY EXPOSURE 5,4% 4,6% 3,1% 1,6% 0,3% 2,0% EQUITY EXPOSURE Rose Ouahba Head of Fixed Income 45,4% 39,4% 0% 50% 56 Modified duration is rebased on the fixed income portion and not at the Fund s level. Portfolio may vary over time Source: Carmignac, 19/10/2018

57 David Older Head of Equities Haiyan Li Analyst 57

58 Carmignac Patrimoine s Equity Philosophy Remains Unchanged ACTIVE MANAGEMENT CONVICTION-DRIVEN RISK MANAGEMENT So What Has Changed? INVESTMENT PROCESS BOTTOMS UP DRIVEN CONVICTIONS RISK MANAGEMENT TOP-DOWN INPUT RISK / REWARD DISCIPLINE 58

59 Global Equity Investment Strategy 59

60 Tech Cons. Disc. Energy Health Care Real Estate Utilities Materials Telecom Industrials Financials Staples Stock Picking is Key in the Current Environment Tech accounted for 98% of the S&P 500 s total return in H Relative performance of the US & World ex-us¹ indices Sectors contribution to the S&P 500 s H total return FAANG stocks contribution to the S&P 500 s H total return MSCI USA MSCI World ex-usa 80 01/16 10/16 07/17 04/18 3,00% 2,50% 2,00% 1,50% 1,00% 0,50% 0,00% -0,50% -1,00% S&P total return: 2.65% 4,00% 3,50% 3,00% 2,50% 2,00% 1,50% 1,00% 0,50% 0,00% -0,50% -1,00% 3.38% FAANG S&P total return: 2.65% -0.73% Rest of index 60 ¹Base 100 as of the 01/01/2016 Left: Datastream, Kepler Chevreux, September 2018 Past performance is not necessarily indicative of future performance Middle & right: S&P, BofA Merrill Lynch US Equities & US Quant Strategy, H FAANG: Facebook, Apple, Amazon, Netflix, Google

61 Even if we don t Perceive Overall Tech Valuations as Over-Stretched, Discipline is Key to Manage Risks P/E ratio adjusted to growth (PEG ratio) US Tech S&P 500 Profit taking on high multiple growth names (Amazon, Software companies) Enterprise value to sales ratio¹ 12,0x 10,0x 8,0x 6,0x 4,0x 12/16 03/17 06/17 09/17 12/17 03/18 06/18 09/18 Servicenow PTC Splunk Increased exposure to lower multiple growth stocks (Booking.com, Electronic Arts, Google) 61 ¹Blended 12 months Sources: LHS: Datastream, IBES, Goldman Sachs Global Investment Research, 28/09/2018 Portfolio composition may vary over time

62 Carmignac Patrimoine: Increasing the Flexibility of the Portfolio Reduction of Emerging Markets exposure Remain underweight leveraged cyclical stocks Cash increase Figures for Carmignac Investissement² Sold domestic Argentine names Reduced Indian banking exposure US & European Financials 8.9% vs 10.9% for our reference indicator¹ Industrials 1.0% vs 5.4% for our reference indicator¹ Materials ex-gold 1.6% vs 2.5% for our reference indicator¹ End Q1 2018: 3.1% End Q3 2018: 6.7% 62 ¹50% MSCI ACWI (EUR) (net dividends reinvested) + 50% Citigroup WGBI All Maturities (EUR) ²Carmignac Investissement reference indicator: MSCI ACWI (EUR) (net dividends reinvested) Source: Carmignac, 28/09/2018 Portfolio composition may vary at any time

63 Finding «Quality» Names Beyond the Tech Sector Style Concentration by sector (%) Where do we find quality? Carmignac Patrimoine: Increase of our healthcare exposure 6,1% 3,4% 63 Q Q Portfolio composition may vary over time Source: Carmignac, 28/09/2018

64 Why is the Food Delivery Industry so Attractive? Investing across geographies Underappreciated addressable market opportunity US addressable market $ Bn $13B $220B $520B Changing consumer habits Current US online restaurant delivery Total US restaurant industry off premise¹ Total US restaurant industry US restaurants % of revenue coming from food ordered online and consumed off premises¹ 6% 11% E High Barriers to Entry Strong two-sided network effects Focusing on Industry Leaders High return business with attractive long term profitability Leverage on secular trends Food cooked at home Asset light platform High frequency habit Low churn 64 Sources: Top Left: Wall Street research, Waitr & Landcadia 2018 ¹ Including drive through Bottom Left: BofA Merrill Lynch, 2015 Right: Carmignac, 28/09/2018

65 Chinese Food Delivery Leader: Meituan Dianping Favourable dynamics for consumer services industry 20 million meals delivered per day 2.9 billion meals delivered in 2017 Sizable addressable market (+20% CAGR*) with low online penetration (12%) 60% 650 mln 57% 82% 156 Undisputed online food delivery leader in China with 59 % market share Diversification into hotel booking services, already a key player with 31% market share 65 Smartphone penetration rate Number of online payment active users Urbanization rate 10 Number of cities with over 1m population Portfolio composition may vary at any time *Chinese local service market size growth expectations between Source: Bloomberg, JP Morgan Research, company data, 28/09/2018

66 Is it Time to Go Back to Emerging Markets? Earnings Growth 2018, YoY¹ P/E Ratio (adjusted for seasonal changes) MSCI US DM countries (excl. US)² MSCI EM S&P 500 MSCI EM EuroStoxx Subdued EM growth Tightening USD liquidity (Strong USD + rising rate environment) Trade tensions 66 Sources: LHS: Morgan Stanley, September 2018 ¹USD for S&P 500 & MSCI EM, for the EuroStoxx 50 RHS: Gerard Minack, 31/08/2018 ²Price index in USD; Index and earnings per share deflated by U.S. CPI inflation Based on the profits of the last 12 months in USD

67 Selective Opportunities among Collateral Victims of the Trade War Example with the Quality Chinese Tech names Performance of US vs Chinese tech sector indices Main Chinese positions of Carmignac Patrimoine¹ /16 02/17 04/17 06/17 08/17 10/ /17 02/18 04/18 06/18 08/18 MSCI China Tech + 92% Nasdaq +30% Nasdaq +9% MSCI China Tech -25% 67 Quality: growth and cash flow Domestic focus FCF yield (2018e) 6% 5% 4% EPS Growth ( e) 29% 68% 25% FCF yield: Free Cash Flow yield EPS: Earnings Per Share Portfolio composition may vary at any time Past performance is not necessarily indicative of future performance ¹As of the 30/06/2018 Source: Carmignac, Bloomberg, 12/10/2018

68 Carmignac Patrimoine: Equity Breakdown Sector Breakdown¹ Geographic Breakdown² TECHNOLOGY 17.2% 4.3% CONSUMER 9.3% FINANCIALS 6.1% ENERGY 4.3% HEALTHCARE 6.1% INDUSTRIALS & MATERIALS 4.2% EMERGING MARKETS³ 8.8% UNITED STATES 25.6% EUROPE 8.9% Performance drivers Quality names Reduced EM exposure Favor US stocks 68 Source: Carmignac, 28/09/2018 Portfolio composition may vary at any time ¹Excluding telecommunications 1,6% vs 1,3% beginning 2018 & utilities 0% vs 0,4% beginning 2018 ²missing Canada: 3,1%/3,8% beginning of 2018 ³excluding Russia: 0,70%/ 0,50% beginning of 2018

69 Main Risks of Carmignac Patrimoine Equity The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization. Interest rate Interest rate risk results in a decline in the net asset value in the event of changes in interest rates. Credit Credit risk is the risk that the issuer may default. Currency Currency risk is linked to exposure to a currency other than the Fund s valuation currency, either through direct investment or the use of forward financial instruments. The Fund presents a risk of loss of capital. 69

70 Main Risks of Carmignac Investissement Latitude Equity The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization. Interest rate Interest rate risk results in a decline in the net asset value in the event of changes in interest rates. Currency Currency risk is linked to exposure to a currency other than the Fund s valuation currency, either through direct investment or the use of forward financial instruments. Discretionary management Anticipations of financial market changes made by the Management Company have a direct effect on the Fund's performance, which depends on the stocks selected. The Fund presents a risk of loss of capital. 70

71 Main Risks of Carmignac Portfolio Emerging Patrimoine Equity The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization. Interest rate Interest rate risk results in a decline in the net asset value in the event of changes in interest rates. Credit Credit risk is the risk that the issuer may default. Emerging markets Operating conditions and supervision in "emerging" markets may deviate from the standards prevailing on the large international exchanges and have an impact on prices of listed instruments in which the Fund may invest. The Fund presents a risk of loss of capital. 71

72 Main Risks of Carmignac Euro-Patrimoine Equity The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization. Credit Credit risk is the risk that the issuer may default. Currency Currency risk is linked to exposure to a currency other than the Fund s valuation currency, either through direct investment or the use of forward financial instruments. Discretionary management Anticipations of financial market changes made by the Management Company have a direct effect on the Fund's performance, which depends on the stocks selected. The Fund presents a risk of loss of capital. 72

73 Main Risks of Carmignac Sécurité Interest rate Interest rate risk results in a decline in the net asset value in the event of changes in interest rates. Credit Credit risk is the risk that the issuer may default. Risk of capital loss The portfolio does not guarantee or protect the capital invested. Capital loss occurs when a unit is sold at a lower price than that paid at the time of purchase. Currency Currency risk is linked to exposure to a currency other than the Fund s valuation currency, either through direct investment or the use of forward financial instruments. The Fund presents a risk of loss of capital. 73

74 Main Risks of Carmignac Portfolio Unconstrained Global Bond Interest rate Interest rate risk results in a decline in the net asset value in the event of changes in interest rates. Credit Credit risk is the risk that the issuer may default. Currency Currency risk is linked to exposure to a currency other than the Fund s valuation currency, either through direct investment or the use of forward financial instruments. Discretionary management Anticipations of financial market changes made by the Management Company have a direct effect on the Fund's performance, which depends on the stocks selected. The Fund presents a risk of loss of capital. 74

75 Main Risks of Carmignac Portfolio Capital Plus Interest rate Interest rate risk results in a decline in the net asset value in the event of changes in interest rates. Credit Credit risk is the risk that the issuer may default. Currency Currency risk is linked to exposure to a currency other than the Fund s valuation currency, either through direct investment or the use of forward financial instruments. Equity The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization. The Fund presents a risk of loss of capital. 75

76 Main Risks of Carmignac Investissement Equity The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization. Currency Currency risk is linked to exposure to a currency other than the Fund s valuation currency, either through direct investment or the use of forward financial instruments. Interest rate Interest rate risk results in a decline in the net asset value in the event of changes in interest rates. Discretionary management Anticipations of financial market changes made by the Management Company have a direct effect on the Fund's performance, which depends on the stocks selected. The Fund presents a risk of loss of capital. 76

77 Main Risks of Carmignac Emergents Equity The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization. Emerging markets Operating conditions and supervision in "emerging" markets may deviate from the standards prevailing on the large international exchanges and have an impact on prices of listed instruments in which the Fund may invest. Currency Currency risk is linked to exposure to a currency other than the Fund s valuation currency, either through direct investment or the use of forward financial instruments. Discretionary management Anticipations of financial market changes made by the Management Company have a direct effect on the Fund's performance, which depends on the stocks selected. The Fund presents a risk of loss of capital. 77

78 Main Risks of Carmignac Portfolio Emerging Discovery Equity The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization. Emerging markets Operating conditions and supervision in "emerging" markets may deviate from the standards prevailing on the large international exchanges and have an impact on prices of listed instruments in which the Fund may invest. Currency Currency risk is linked to exposure to a currency other than the Fund s valuation currency, either through direct investment or the use of forward financial instruments. Liquidity Temporary market distortions may have an impact on the pricing conditions under which the Fund might be caused to liquidate, initiate or modify its positions. The Fund presents a risk of loss of capital. 78

79 Main Risks of Carmignac Portfolio Commodities Equity The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization. Commodities Changes in commodity prices and the volatility of the sector may cause the net asset value to fall. Currency Currency risk is linked to exposure to a currency other than the Fund s valuation currency, either through direct investment or the use of forward financial instruments. Discretionary management Anticipations of financial market changes made by the Management Company have a direct effect on the Fund's performance, which depends on the stocks selected. The Fund presents a risk of loss of capital. 79

80 Main Risks of Carmignac Portfolio Grande Europe Equity The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization. Currency Currency risk is linked to exposure to a currency other than the Fund s valuation currency, either through direct investment or the use of forward financial instruments. Discretionary management Anticipations of financial market changes made by the Management Company have a direct effect on the Fund's performance, which depends on the stocks selected. The Fund presents a risk of loss of capital. 80

81 Main Risks of Carmignac Euro-Entrepreneurs Equity The Fund may be affected by stock price variations, the scale of which is dependent on external factors, stock trading volumes or market capitalization. Currency Currency risk is linked to exposure to a currency other than the Fund s valuation currency, either through direct investment or the use of forward financial instruments. Liquidity Temporary market distortions may have an impact on the pricing conditions under which the Fund might be caused to liquidate, initiate or modify its positions. Discretionary management Anticipations of financial market changes made by the Management Company have a direct effect on the Fund's performance, which depends on the stocks selected. The Fund presents a risk of loss of capital. 81

82 DISCLAIMER This document is intended for professional clients. This document may not be reproduced, in whole or in part, without prior authorisation from the management company. This document does not constitute a subscription offer, nor does it constitute investment advice. The information contained in this document may be partial information, and may be modified without prior notice. Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). 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. Copyright: The data published in this presentation are the exclusive property of their owners, as mentioned on each page. The reference to a ranking or prize, is no guarantee of the future results of the UCIS or the manager. Morningstar Rating : 2017 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. Carmignac Portfolio refers to the sub-funds of Carmignac Portfolio SICAV, an investment company under Luxembourg law, conforming to the UCITS Directive. The Funds are common funds in contractual form (FCP) conforming to the UCITS Directive under French law. Access to the Funds may be subject to restrictions with regard to certain persons or countries. 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/or FATCA. The Funds present a risk of loss of capital. The risks, fees and ongoing charges are described in the KIIDs (Key Investor Information Document). The Funds' respective prospectuses, KIIDs and annual reports are available at or upon request to the Management Company. The KIIDs must be made available to the subscriber prior to subscription. The investor should read the KIID for further information. United Kingdom: The Funds' respective prospectuses, KIIDs, NAV and annual reports are available in English at 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 material was prepared by Carmignac Gestion and/or Carmignac Gestion Luxembourg and is being distributed in the UK by Carmignac Gestion Luxembourg UK Branch (Registered in England and Wales with number FC031103, CSSF agreement of 10/06/2013). The KIIDs must be made available to the subscriber prior to subscription. Belgium: This document is intended for professional clients and has not been submitted for FSMA validation. The prospectuses, KIIDs, the net asset values and the latest (semi-) annual management reports may be obtained, free of charge, in French or in Dutch, from the management company (tel ). These documents may also be obtained via the website or from Caceis Belgium S.A., the financial service provider in Belgium, at the following address: avenue du port, 86c b320, B-1000 Brussels. Switzerland: The Fund s respective prospectuses, KIIDs and annual reports are available at or through our representative in Switzerland, CACEIS (Switzerland) SA, Route de Signy 35, CH-1260 Nyon. Non contractual document, completion achieved on 22/10/2018. CARMIGNAC GESTION 24, place Vendôme - F Paris Tel: (+33) Investment management company approved by the AMF. Public limited company with share capital of 15,000,000 RCS Paris B CARMIGNAC GESTION LUXEMBOURG City Link - 7, rue de la Chapelle - L-1325 Luxembourg - Tel: (+352) 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