Quarterly Meeting 3rd quarter 2018 - PROFESSIONALS ONLY - Carmignac ...
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P R O F E S S I O N A L S O N LY Quarterly Meeting 3rd quarter 2018
Didier Saint-Georges
Managing Director,
Member of the Investment Committee
PROFESSIONALS ONLY 2
US Equity Markets:
Sector Performances Since the Beginning of the Year
S&P 500 Index 9,0%
Technology 19,5%
Consumer discretionary 19,5%
Healthcare 15,2%
Energy 5,2%
Industrials 3,3%
Utilities 0,0%
Real Estate -1,0%
Finance -1,2%
Communication -3,3%
Materials -4,2%
Consumer staples -5,5%
Source: Carmignac, Bloomberg, 28/09/2018
PROFESSIONALS ONLY 3
Chinese Equity Markets:
Sector Performances Since the Beginning of the Year
-14,7% Shanghai Shenzhen CSI 300 Index
1,0% Healthcare
-2,9% Energy
-4,7% Utilities
-7,4% Consumer staples
-11,6% Finance
-18,8% Consumer discretionary
-20,4% Materials
-20,9% Industrials
-26,6% Technology
-31,5% Telecoms
Source: Carmignac, Bloomberg, 28/09/2018
PROFESSIONALS ONLY 4
Carmignac Patrimoine:
Performance Attribution Since the Beginning of the Year (%)
Net performance: -4.01%
4.1% LONG TERM CONVICTIONS
US EQUITIES, HIGH VISIBILITY STOCKS
0.2% CREDIT
TRUMP COLLATERAL EFFECTS
-5.5% (DOLLAR, EMERGING, COMMODITIES,
GOLD, CHINESE TECH)
-1.7% OTHER
Source: Carmignac, 28/09/2018
Performance shown on the graph are gross figures and do not include fees
PROFESSIONALS ONLY 5 Past performance is not a reliable indicator of future performance.
Performance of our Fund Range During the Third Quarter
EQUITY range PATRIMOINE range FIXED INCOME range
C. Investissement C. Patrimoine C. Portfolio Unconstrained
-2.61% -2.79% Global Bond
Global -0.51%
C. Investissement Latitude C. Portfolio Capital Plus
-2.66% +0.02%
C. Portfolio Grande Europe C. Long-Short C. Sécurité
-0.44% European Equities -0.41%
Europe -0.50%
C. Euro-Entrepreneurs
+0.37%
C. Emergents C. Portfolio Emerging Patrimoine
-3.72% -3.28%
Emerging
C. Portfolio
Emerging Discovery
+0.76%
C. Portfolio
Thematic Commodities
-3.33%
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
PROFESSIONALS ONLY 6 relative to the reference indicator.
Frédéric Leroux
Global Fund Manager,
Head of Cross Asset Team
PROFESSIONALS ONLY 7
America First! But at What Cost?
PROFESSIONALS ONLY 8
United States: The Economic Policy « Miracle »
United States: consumption United States: investment
9% Investment outlook over 6 months (Fed
surveys), 4 months advanced
Household revenue growth
7%
expectations
5%
3%
1%
-1% Libor 3-month
real rate
Non-residential
-3%
investments (yoy %)
-5%
Source: Carmignac, Datastream, 09/2018
PROFESSIONALS ONLY 9United States: An Unusual Timing in the Economic Cycle for
a Fiscal Stimulus
Fiscal stimuli & Output gap
4,0
Economic Output Gap Trump tax plan
2,0
recovery act
1981
0,0
-2,0
Fiscal reform Bush tax cut Bush tax
-4,0 1986 2001 cut 2003
-6,0 American
recovery
Recession periods
act 2009
-8,0
Source: Carmignac, 09/2018
PROFESSIONALS ONLY 10United 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)
Prime age employment/
Leading indicator on inflation population ratio (4-months
(computed by the New York advanced)
Fed)
Source: Carmignac, Datastream, 09/2018
*The Core PCE Price Index is a consumer price index that excludes food and energy
PROFESSIONALS ONLY 11United States:
Overheating Risks are Threatening Wealth Effects
United States: company profitability United States: housing market
21% Existing home
sales
19%
Gross margins
17%
15%
13%
11%
9%
Household
7% Net margins confidence on
5% housing market
3%
Source: Carmignac, 09/2018
PROFESSIONALS ONLY 12It’s Getting Late Mr. Powell
Taylor rule US credit growth
8% US non financial
corporate debt growth
6% (%yoy)
Taylor rule*
4%
2%
0%
-2%
Fed’s fund rates
-4% adjusted to its balance Banking credit
sheet conditions
-6%
*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.
PROFESSIONALS ONLY 13 Source: Carmignac, Bloomberg, 09/2018The United States and
the Rest of the World
PROFESSIONALS ONLY 14The Tightening Continues
Annual change in the main central banks’ balance sheets ($Bn)
$Bn
Projections
2 300
2 000
1 700
1 400
1 100
800
500
200
-100
-400
-700
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
FED ECB BOJ Total
Source: Carmignac, Bloomberg, 09/2018
PROFESSIONALS ONLY 15Monetary Tightening and Repatriation Create
a Biased Situation in Favour of the United States
$Bn $Bn
400
US Share buybacks
0
Foreign earnings
-400 retained abroad
Cash Repatriation
(1-year rolling)
-800
Source: Carmignac, 09/2018
PROFESSIONALS ONLY 16Emerging World
PROFESSIONALS ONLY 17China: 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)
Source: Carmignac, Datastream, 08/2018
PROFESSIONALS ONLY 18China:
A Rate-Cut Stimulus Would Exacerbate Capital Outflows
But other ways exist
China: international dynamics China: capital outflows
$Bn
5%
China-US 5-year swap differential
4%
3% Current account,
in % of GDP
2%
1%
0% Capital outflows
Net foreign direct investments,
-1% in % of GDP
Source: Carmignac, Bloomberg, 09/2018
PROFESSIONALS ONLY 19Eurozone
PROFESSIONALS ONLY 20Eurozone:
ECB Stuck Between Inflation and Decelerating Growth
Eurozone: GDP growth (quarterly) Eurozone: inflationary pressure
Real GDP 5%
1% Labor cost Index
4%
0%
3%
-1% GDP leading indicator
(proprietary model) Regressed on
2%
unemployment and
hiring intentions
-2% (proprietary model)
1%
Source: Carmignac, 09/2018
PROFESSIONALS ONLY 21Europe: An Economic Slowdown in 2019
Would Reinforce Political Risks for Markets
Rise of nationalism in Europe
Source: BBC, 09/2018
PROFESSIONALS ONLY 22Investment Strategy PROFESSIONALS ONLY 23
Investment Strategy: Same Reasons, Same Effects
10-year US rates US: relative performance vs the rest of the world
3,5%
150
MSCI USA
3,0% 140
130
2,5%
120
2,0% 110
1,5% 100
MSCI World ex-USA
90
1,0%
80
01/16 10/16 07/17 04/18
Source: Carmignac, Bloomberg
Left: 12/10/2018
PROFESSIONALS ONLY 24 Right: 28/09/2018Investment Strategy: Towards an Interest Rate Regime Shift
10-year US rates
16%
14%
12%
10%
8%
6%
4%
2%
0%
Source: Carmignac, Bloomberg, 12/10/2018
PROFESSIONALS ONLY 25Biggest Losers: Leveraged Cyclical Stocks
Sentiment towards global earnings
Both cyclical and leveraged: this cycle’s biggest losers
peaked in January
Number of stocks upgraded / Number downgraded
Weekly Earnings Revision Ratio (ERR)
3-week Rolling Average ERR 110
105 MSCI World
100
95
Average Earnings
Revision Ratio
90 Basket of leveraged cyclical
stocks
85
80
Source: Carmignac,
Left: 09/2018
PROFESSIONALS ONLY 26 Right: 19/10/2018Equity Markets: Similarities with the 60’s
60’s: S&P500 – EPS* growth
29%
United States: 60’s
18%
110 9% 13% 15% 11% 11%
8% 9% 7%
8% 2% 1% 5% 1%
100 S&P 500
7%
(LHS)
6% -9%
90 -10%
US 10-year yield (RHS) 5% -18%
60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
80 4%
3% US corporate profits and output gap
70
2%
Inflation 1%
60
(CPI)- RHS 0%
50 -1%
Source :
Non-financial corporate profits Left: Bloomberg, 10/2018
Top: Bloomberg, 31/03/1969
Output gap, 12-month advanced Bottom: Carmignac, 09/2018
PROFESSIONALS ONLY 27 EPS: earnings per share“Nifty Fifty”: a Bubble?
Jan. 1973 Oct. 2018
« Nifty Fifty » « Nifty Fifty 2.0 »
42 21,5
average P/E
Today’s "Nifty
S&P500 P/E 19 16,8 S&P 500 Nasdaq
fifty“
10-year U.S. rates 6.9% 3.19%
Growth expectations (%)
2019 EPS* Growth 10.5% 10.1% 16.0%
Jan. 1973 : « Nifty Fifty » - P/E
Walt Disney 82 Profitability/Leverage
Intel. Flavors & Frag 78,2 Return on equity 31.4% 19.2% 20.4%
McDonald’s 72,5 Net debt to EBITDA 0.2 1.1 0.3
Baxter Intl. 71,8
Avon Products 68,3 Examples of “Nifty Fifty 2.0” stocks
Johnson & Johnson 65,2
Xerox 51,7 Mastercard
Coca Cola 50,2
Alphabet
Eli Lilly 49,8
Celgene
Booking
Merck & Co. 48,4
Tencent
Procter & Gamble 43,5
Costco
American Express 39,5
Becton-Dickinson
Source: Carmignac, Bloomberg, 10/2018
EPS = earnings per share
PROFESSIONALS ONLY 28Investment Strategy
P ER FOR MANCE RISK
DRIVERS MANAGEMENT
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
Source: Carmignac, 28/09/2018
Portfolio composition may vary over time.
PROFESSIONALS ONLY 29Carmignac Patrimoine:
Highly Selective Performance Drivers
Portfolio construction
CREDIT 17%
NORTH AMERICA PERIPH. SOVEREIGN
22% (ex. energy & gold) DEBT 9%
CORE
4% ENERGY SOVEREIGN
DEBT 4%
10% EMERGING EMERGING
DEBT 3%
9% EUROPE CASH/CASH
EQUIVALENT 20%
2% GOLD
Currency exposure
Equities Modified duration*
USD 0% 100%
Exposure 0% 50%
EUR 0% 100%
Investment 0% 50% YEN 0% 100%
Source: Carmignac
Top: 28/09/2018
Bottom: 14/10/2018
PROFESSIONALS ONLY 30 *Modified duration is computed at the fixed income component level and not at the fund’s level.
Portfolio composition may vary over time.Rose Ouahba
Head of Fixed Income
Keith Ney
Fixed Income Fund manager
PROFESSIONALS ONLY 311) The Federal Reserve Determined to
Pursue its Monetary Policy Tightening
PROFESSIONALS ONLY 32Solid Growth Implies Higher Inflation
United States: Inflation and Output gap
2% 2,5%
3-year rolling US inflation* (annual change) Output gap
1,5% 1,5%
0,5%
1%
-0,5%
0,5% -1,5%
0% -2,5%
-0,5% -3,5%
-4,5%
-1%
-5,5%
-1,5% -6,5%
-2% -7,5%
Source: Bloomberg, Carmignac, 31/08/2018
*US PCE : US Personal Consumption Expenditure Index is a US consumer price index
PROFESSIONALS ONLY 33Real Yields Have Adjusted Upward
US 30-year yields and breakeven
2,5% 5%
30-year US real yields (left) 4,5%
2%
4%
30-year US nominal yields (right)
1,5% 3,5%
3%
1% 2,5%
2%
0,5%
1,5%
US 30-year breakeven (right)
0% 1%
Source: Bloomberg, 18/10/2018
PROFESSIONALS ONLY 34Fed Projections Are Not Yet Priced In by Markets
Fed funds projections by the Fed and the market
3,6%
3,4% 3,375
3,2%
3,125
3% 2,92 2,96
2,8% 2,92
2,875
2,6%
2,4% 2,38
2,375
2,2% Markets Fed Median
2%
1,8%
2018 2019 2020 Terminal
Source: Carmignac, 18/10/2019
PROFESSIONALS ONLY 35The Fed is Reducing its Balance Sheet
Fed –– Inflows
Fed Inflows annual
annual change
change Who
Who is
is buying
buying thethe US
US Debt?
Debt?
(in billion $)
(in billion $) (in billion $)
(in billion $)
0 2000
-3 US Bonds ex-T-bills net Issuance
-50
Fed
-100 1500
Rest of world
-150
-200 1000
-250
-300 500
-350
-400 -357 0
-391
-450
-500 -467 -500
2017 2018 2019 2020
Sources:
Left: Federal Reserve, October 2018
PROFESSIONALS ONLY 36 Right: Bloomberg, 15/10/2018US Long-Term Yields, Adjusted from FX Risk, Are Not Attractive
10-year yields in core countries after FX hedging Japanese investment in foreign bonds
for a Japanese investor (government and credit)
0,95%
0,9%
France
0,6% 0,55%
United-States (RHS)
0,3% Germany
0,15%
0,08%
0,0%
10 yr US 10 yr JPY 10 yr DE 10 yr FR
Source: Carmignac, Natwest, 18/10/2018
PROFESSIONALS ONLY 37How Equity Markets will Accommodate to a Higher Yield
Environment?
United States: real yields and equity/bond correlation
80%
2,20%
10-year US real yields – Neutral Equity/Bond weekly correlation 60%
1,60% Rate (52 weeks rolling) 40%
1,00% 20%
0,40% 0%
-20%
-0,20%
-40%
-0,80%
-60%
-1,40% -80%
-2,00% -100%
Correlation calculations based on assets weeklyperformance
Source: Carmignac, 30/09/2018
PROFESSIONALS ONLY 38Divergence Between US Growth and Rest of the World
Manufacturing PMI Index
65
60 United States
55 Eurozone
50 Emerging Markets
45
40
07 08 09 10 11 12 13 14 15 16 17 18
Sources: Bloomberg, 30/09/2018
PROFESSIONALS ONLY 39Time to Come Back on Emerging Market Debt?
EM FX EM Local Debt EM External Debt
95 7,5% +143 bps
+57 bps in 2018
90 in 2018
6,5%
7,0%
85
80 -11%
In 2018 6,5%
75 5,5%
70
6,0%
65
60 5,5% 4,5%
08/13 08/15 08/17 09/13 09/15 09/17 09/13 09/15 09/17
Source : Bloomberg, 19/10/2018
PROFESSIONALS ONLY 40Carmignac Patrimoine: US Positioning
MODIFIED DURATION
-174 bp
CURRENCY EXPOSURE
EUR 45.4%
USD 39.4%
Modified duration is rebased on the fixed income portion and not at the Fund’s level.
Portfolio may vary over time
PROFESSIONALS ONLY 41 Source: Carmignac, 19/10/20182) Europe: Surviving Financial Repression
PROFESSIONALS ONLY 42Financial Repression: Nowhere to Hide
October 2018
4
7-10yr IT
5-7yr IT
3
3-5yr IT
2 1-3yr IT
Yield
7-10yr SP
1 5-7yr SP
3-5yr SP 7-10yr FR 7-10yr GER
5-7yr FR
0 6m IT 1-3yr SP 3-5yr FR 5-7yr GER
Deposit rate 6m SP 3-5yr GER
1-3yr FR
6m FR 1-3yr GER
-1 6m GER
0 1 2 3 4 5 6 7 8 9 10
Effective Duration
Source: Bloomberg, 15/10/2018
PROFESSIONALS ONLY 43Eurozone Growth Stabilization Above
Potential Drives Continued Wage Inflation
Eurozone: growth Eurozone: wage inflation
5,0%
Model (uer-Nairu,
1% hiring intentions )
4,0%
Labor cost
index
0% 3,0%
Real GDP QoQ% 2,0%
-1%
1,0% Model (uer-Nairu, hiring
Model intent, part-time )
-2% 0,0%
Source: Carmignac, 09/2018
PROFESSIONALS ONLY 44Post-QE Supply Should Put Pressure on Rates
70 1,2%
60 1%
EMU Supply (ex-ECB) in 10yr equivalent
50 0,8%
40 0,6%
Bn€
30 0,4%
20 0,2%
10yr German rate yield
10 0%
0 -0,2%
Source: Citi Research, 18/10/2018
EMU: Economic and monetary union
PROFESSIONALS ONLY 45Not Enough Priced-in « Through Summer »
EONIA curve (in basis points)
20
10
0
20 bp-hike priced for Feb-20
-10
-20 10 bp-hike priced for Sept-19
-30
-40
Source: Bloomberg, 18/10/2018
PROFESSIONALS ONLY 46Bund Safe Haven Premium Ought to Reverse
0,2% 0,8%
Eonia 2y1m 0,7%
0,1%
0,6%
0%
0,5%
-0,1%
0,4%
-0,2%
0,3%
-0,3%
0,2%
-0,4% 10yr German Sovereign Bond Yield
0,1%
-0,5% 0%
Source: Bloomberg, 18/10/2018
PROFESSIONALS ONLY 47Real Yields Hit All-Time Low Negative in May
10y German yield versus 10y Eurozone inflation
4%
10y German real yield 10y German yield 10y EUR inflation
3%
2%
1%
0%
-1%
-2%
Source: Bloomberg, 18/10/2018
PROFESSIONALS ONLY 48Benchmark Duration Risk at All-Time High
Effective Duration - BAML Euro Government Index
7,5
7
6,5 YTM: 0.97%
6
5,5 YTM: 4.89%
5
4,5
4
Source: BAML All Maturity All Euro Government Index as at 05/10/2018
YTM: Yield to maturity
PROFESSIONALS ONLY 49Italian Budget Likely to be Rejected by the Commission
Budget deficit (in % of GDP) Government debt / GDP
1% 134%
Government projections – Parliamentary budget office
0,5% April 2018 132%
0%
Government
-0,5% 130%
projections –
-1% October 2018
128%
-1,5%
-2% 126%
-2,5% 124%
Government projections – Government projections –
-3% October 2018 April 2018
122%
-3,5% Initial draft
-4% 120%
2014 2015 2016 2017 2018 2019 2020 2021 2014 2015 2016 2017 2018 2019 2020 2021
Source: Bloomberg, European Commission, Government of Italy, Parliamentary budget office, 18/10/2018
PROFESSIONALS ONLY 50Italian Downgrade to High Yield Largely Priced
10-years rates vs ratings matrix (average rating)
4,5%
Greece
4%
Italy
3,5%
3%
2,5%
2% Spain Portugal
1,5%
1%
0,5% France
Germany
0%
AAA AA+ AA AA- A+ A A- BBB+ BBB BBB-
BBB- BB+
BB+ BB BB- B+
Source: Bloomberg, 22/10/2018
PROFESSIONALS ONLY 51Greece: Imbalances Have Corrected
Greece: Current account & budget deficit
4%
Current account (in %) Reforms rebuilt competitiveness
0%
Growth and surplus beating Commission
-4% estimates
Large cash reserve reduces funding risk
-8%
Yields penalized by Italian and EM contagion
-12%
Budget deficit (in %)
-16%
Sources: IMF, ECB, Bloomberg, 30/09/2018
PROFESSIONALS ONLY 52European CLOs Remain Misunderstood
AAA CLO Spread vs % of loss-making tranches
iTraxx Main index (A-/BBB+) over the past 20 years
180
Global CLOs
160
Spread (basis points)
140 Baa
EMEA ABS,CMBS & RMBS
120 Aaa
100 US CMBS
80
60 Global CDOs (ex CLOs)
40
20 Global Structure Finance
0
US Sub-prime RMBS
EUR CLO 2.0, AAA Markit iTraxx Europe Main 0% 20% 40% 60% 80% 100%
Sources:
Left: Bloomberg, Citi Global Markets, 18/10/2018
PROFESSIONALS ONLY 53 Right: Goldman Sachs, November 2015Portfolio Construction
PROFESSIONALS ONLY 54Keith Ney
Carmignac Sécurité Fixed Income
Fund Manager
MODIFIED DURATION KEY FIGURES
-296 bp
Total -3 +4 Cash, T-Bills and bonds < 1
year maturity 33%
Core rates YTM 0.73%
Non-core rates
Average maturity 3.61 years
Credit
Portfolio may vary overtime
Source: Carmignac, 19/10/2018
PROFESSIONALS ONLY 55Rose Ouahba
Carmignac Patrimoine Head of
Fixed Income
MODIFIED DURATION CURRENCY EXPOSURE
-384 bp
Total -4 +10 EUR 45,4%
USD 39,4%
JPY 5,4%
Core rates GBP 4,6%
Non core rates
Asia (ex. Japan) 3,1%
EMEA 1,6%
EM rates AUD & CAD 0,3%
Latin America 2,0%
Credit
EQUITY EXPOSURE
0% 50%
Modified duration is rebased on the fixed income portion and not at the Fund’s level.
Portfolio may vary over time
PROFESSIONALS ONLY 56 Source: Carmignac, 19/10/2018David Older
Head of Equities
Haiyan Li
Analyst
PROFESSIONALS ONLY 57Carmignac Patrimoine’s Equity Philosophy Remains Unchanged
ACTIVE MANAGEMENT CONVICTION-DRIVEN RISK MANAGEMENT
So What Has Changed?
INVESTMENT BOTTOMS UP DRIVEN CONVICTIONS
PROCESS
RISK TOP-DOWN INPUT RISK / REWARD DISCIPLINE
MANAGEMENT
PROFESSIONALS ONLY 58Global Equity Investment Strategy
PROFESSIONALS ONLY 59Stock Picking is Key in the Current Environment
Tech accounted for 98% of the S&P 500’s total return in H1 2018
Relative performance of the US Sectors’ contribution to the FAANG stocks contribution to the
& World ex-US¹ indices S&P 500’s H1 2018 total return S&P 500’s H1 2018 total return
150 3,00% 4,00%
MSCI USA S&P total return: 2.65% 3.38%
3,50%
140 2,50%
3,00% S&P total return: 2.65%
2,00%
130 2,50%
1,50% 2,00%
120
1,00% 1,50%
110
0,50% 1,00%
100 0,50%
MSCI World ex-USA 0,00%
0,00%
90 -0,50%
-0,50%
80 -1,00% -1,00% -0.73%
Staples
Real Estate
Cons. Disc.
Materials
Utilities
Telecom
Tech
Energy
Industrials
Financials
Health Care
01/16 10/16 07/17 04/18 FAANG Rest of index
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, H1 2018
PROFESSIONALS ONLY 60 FAANG: Facebook, Apple, Amazon, Netflix, GoogleEven 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)
3.0
2.5
2.0 US Tech Profit taking on high multiple
1.5 S&P 500 growth names
(Amazon, Software companies)
1.0
0.5
0
Enterprise value to sales ratio¹
12,0x
10,0x Increased exposure to lower
Servicenow
8,0x
multiple growth stocks
PTC
(Booking.com, Electronic Arts, Google)
Splunk
6,0x
4,0x
12/16 03/17 06/17 09/17 12/17 03/18 06/18 09/18
¹Blended 12 months
Sources:
LHS: Datastream, IBES, Goldman Sachs Global Investment Research, 28/09/2018
PROFESSIONALS ONLY 61 Portfolio composition may vary over timeCarmignac Patrimoine: Increasing the Flexibility of the Portfolio
Reduction of Remain underweight leveraged Cash increase
Emerging Markets exposure cyclical stocks Figures for Carmignac Investissement²
US & European Financials
End Q1 2018:
Sold domestic 8.9% vs 10.9%
Argentine names for our reference indicator¹
3.1%
Industrials
1.0% vs 5.4%
for our reference indicator¹
Reduced Indian End Q3 2018:
banking exposure Materials ex-gold
1.6% vs 2.5% 6.7%
for our reference indicator¹
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
PROFESSIONALS ONLY 62Finding « Quality » Names Beyond the Tech Sector
Carmignac Patrimoine:
Style Concentration by sector (%)
Increase of our healthcare exposure
Where do we find quality?
6,1%
3,4%
Q2 2018 Q3 2018
Portfolio composition may vary over time
Source: Carmignac, 28/09/2018
PROFESSIONALS ONLY 63Why is the Food Delivery Industry so Attractive?
Investing across geographies
US restaurants
US addressable market % of revenue coming from food ordered
$ Bn online and consumed off premises¹
High Barriers to Entry
11%
Under- Current US online Strong “two-sided” network
$520B restaurant delivery
appreciated effects
6%
addressable $220B
market $13B Total US restaurant Focusing on Industry Leaders
opportunity industry off premise¹
Total US restaurant
industry
2016 2022E
High return business with
Changing consumer habits attractive long term profitability
Asset light “platform”
Leverage on High frequency habit
secular trends Food cooked at home
Low churn
Sources:
Top Left: Wall Street research, Waitr & Landcadia 2018
¹ Including drive through
PROFESSIONALS ONLY 64 Bottom Left: BofA Merrill Lynch, 2015
Right: Carmignac, 28/09/2018Chinese Food Delivery Leader: Meituan Dianping
Favourable dynamics for consumer services industry
650
mln
82%
156
20 million meals delivered per day
2.9 billion meals delivered in 2017
57%
Sizable addressable market (+20% CAGR*) 60%
with low online penetration (12%)
Undisputed online food delivery leader
in China with 59 % market share
10
Diversification into hotel booking services,
already a key player with 31% market share Urbanization Number of cities
Smartphone rate with over 1m
penetration rate population
Number of online
Portfolio composition may vary at any time
payment active users *Chinese local service market size growth
expectations between 2017-2023
Source: Bloomberg, JP Morgan Research,
PROFESSIONALS ONLY 65 company data, 28/09/2018Is it Time to Go Back to Emerging Markets?
Earnings Growth 2018, YoY¹ P/E Ratio (adjusted for seasonal changes)
40
35
30
25 MSCI US
20
15 DM countries
(excl. US)²
10
MSCI EM
5
S&P 500 MSCI EM EuroStoxx 50 06 07 08 09 10 11 12 13 14 15 16 17 18
Subdued EM growth
Tightening USD liquidity (Strong USD + rising rate environment)
Trade tensions
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
PROFESSIONALS ONLY 66Selective 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
2017 MSCI China
200 Tech + 92% Quality: growth and cash flow
Domestic focus
150 Nasdaq
+30%
FCF yield EPS Growth
100
(2018e) (2018-2019e)
12/16 02/17 04/17 06/17 08/17 10/17
2018
6% 29%
120
Nasdaq
110 +9% 5% 68%
100
90 4% 25%
80 MSCI China
Tech -25%
70
12/17 02/18 04/18 06/18 08/18 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
PROFESSIONALS ONLY 67 Source: Carmignac, Bloomberg, 12/10/2018Carmignac Patrimoine: Equity Breakdown
Sector Breakdown¹ Geographic Breakdown²
TECHNOLOGY INDUSTRIALS &
MATERIALS UNITED STATES
4.2%
17.2%
4.3%
25.6%
CONSUMER ENERGY EMERGING EUROPE
9.3% 4.3% MARKETS³
8.8% 8.9%
FINANCIALS HEALTHCARE
Performance drivers
6.1% 6.1% • Quality names
• Reduced EM exposure
• Favor US stocks
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
PROFESSIONALS ONLY 68 ³excluding Russia: 0,70%/ 0,50% beginning of 2018Main 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.
PROFESSIONALS ONLY 69Main 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.
PROFESSIONALS ONLY 70Main 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.
PROFESSIONALS ONLY 71Main 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.
PROFESSIONALS ONLY 72Main 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.
PROFESSIONALS ONLY 73Main 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.
PROFESSIONALS ONLY 74Main 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.
PROFESSIONALS ONLY 75Main 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.
PROFESSIONALS ONLY 76Main 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.
PROFESSIONALS ONLY 77Main 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.
PROFESSIONALS ONLY 78Main 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.
PROFESSIONALS ONLY 79Main 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.
PROFESSIONALS ONLY 80Main 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.
PROFESSIONALS ONLY 81DISCLAIMER
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 www.carmignac.com, 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
www.carmignac.co.uk, 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. +352 46 70 60 1). These documents may also be
obtained via the website www.carmignac.be 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 www.carmignac.ch, 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 - 75001 Paris – Tel: (+33) 01 42 86 53 35
Investment management company approved by the AMF. Public limited company with share capital of € 15,000,000 – RCS Paris B 349 501 676
CARMIGNAC GESTION LUXEMBOURG – City Link - 7, rue de la Chapelle - L-1325 Luxembourg - Tel: (+352) 46 70 60 1 – Subsidiary of Carmignac Gestion.
Investment fund management company approved by the CSSF. Public limited company with share capital of € 23,000,000 – RC Luxembourg B67549
PROFESSIONALS ONLY 82You can also read
