Carmignac P. Credit : Letter from the Fund Manager

  • -9.28%
    Carmignac Portfolio Credit's performance

    in the 2nd quarter of 2022 for the A EUR Share class

  • -8.18%
    Reference indicator’s performance

    in the 2nd quarter of 2022 for the 75% ICE BofA Euro Corporate Index and 25% ICE BofA Euro High Yield Index

  • +4.00%
    Annualized performance of the Fund since launch

    versus -0.89% for the reference indicator1

Carmignac Portfolio Credit recorded a negative performance of -9.28% during the second quarter of 2022, for the A EUR Acc share class, and its reference indicator¹ (75% ICE BofA Euro Corporate Index and 25% ICE BofA Euro High Yield Index) lost -8.18%. Year-to-date, the fund is down -14.77% vs -12.91-% for its reference indicator, an underperformance of -1.86%.

As we indicated last quarter, the underperformance is more than fully explained by the performance of our Russian investments, which detracted more than -3% from the fund’s return so far this year. This underperformance has been mitigated by the high carry of the portfolio as well as by our significant level of hedging since the beginning of 2022.

Quarterly Performance Review

In the immediate aftermath of the invasion of Ukraine, we were surprised to see credit markets treating the war as an isolated event, with negative valuation impacts largely centered on companies with direct link to Ukraine or Russia. Our view, however, was that a prolonged conflict would steer inflation to a destabilizing level for many issuers since it was curtailing large supplies of key commodities and accelerating the trend towards deglobalization (with the reshoring of production capacity and inventory). Additionally, since these strong headwinds impacting businesses are inflationary in nature, we expected that they would significantly hinder central banks’ ability to ease monetary policy.

How is the fund positioned?

We took stock of these developments and repositioned the fund in early March. We stepped up our hedging by raising our CDS protection on HY indices to 27.5% of the fund’s value. We also increased our exposure to attractive bonds issued by companies that stand to benefit from an inflationary environment (many of them in the energy and commodities space) as well our exposure to selected CLOs tranches. These CLO tranches are floating rate, meaning they are well insulated against interest rate volatility; they offer generous returns compared to their fundamental risks and are structured in a way that prevents capital losses even under very pessimistic recession scenarios.

In the four months following the invasion, inflation indeed soared to high levels in most economies and is now starting to impact many companies’ profits. Most central banks have embarked on determined tightening cycles in response. All these factors have caused, credit markets to reprice severely to the downside.

Our positioning has remained largely the same, except for a modest reduction in our hedging position, due to the widening of HY credit indices. But we still have a meaningful amount of protection since we believe the current environment calls on us to keep options open and maintain a conservative net exposure. After their historically bad performance of the first half of 2022, we think credit markets are now very attractive, to an extent we have only seen a handful of times since the beginning of our careers. Today, the fund is invested in a very diversified set of securities, offering yields far in excess of their fundamental cost of risk. As a result, the fund has a compelling carry, even after factoring the cost of hedging.

What is our outlook for the coming months?

Performance could well remain volatile in the coming weeks but, with a year-end horizon, the carry of the fund can absorb a meaningful amount of widening – past data indicate that the level of carry we currently have is consistent with strong returns. Additionally, the market value of our Russian holdings is far below their net present value even under most conservative recovery scenarios: downside is limited going forward and there is significant upside potential if tensions between Russia and the rest of the world abate.

1Reference indicator : 75% ICE BofA Euro Corporate Index + 25% ICE BofA Euro High Yield Index (Coupons reinvested, Quarterly rebalanced)

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Carmignac Portfolio Credit A EUR Acc

ISIN: LU1623762843
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 (YTD)
Year to date
Carmignac Portfolio Credit A EUR Acc - - - +1.79 % +1.69 % +20.93 % +10.39 % +2.96 % -13.01 % +10.58 % +4.06 %
Referenzindikator - - - +1.13 % -1.74 % +7.50 % +2.80 % +0.06 % -13.31 % +9.00 % +0.50 %

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3 Jahre 5 Jahre 10 Jahre
Carmignac Portfolio Credit A EUR Acc +0.26 % +3.86 % -
Referenzindikator -1.67 % +0.17 % -

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Quelle: Carmignac am 31/05/2024

Einstiegskosten : 2,00% des Betrags, den Sie beim Einstieg in diese Anlage zahlen. Dies ist der Höchstbetrag, der Ihnen berechnet wird. Carmignac Gestion erhebt keine Eintrittsgebühr. Die Person, die Ihnen das Produkt verkauft, teilt Ihnen die tatsächliche Gebühr mit.
Ausstiegskosten : Wir berechnen keine Ausstiegsgebühr für dieses Produkt.
Verwaltungsgebühren und sonstige Verwaltungs- oder Betriebskosten : 1,20% des Werts Ihrer Anlage pro Jahr. Hierbei handelt es sich um eine Schätzung auf der Grundlage der tatsächlichen Kosten des letzten Jahres.
Erfolgsgebühren : 20,00% wenn die Anteilsklasse während des Performancezeitraums den Referenzindikator übertrifft. Sie ist auch dann zahlbar, wenn die Anteilsklasse den Referenzindikator übertroffen, aber eine negative Performance verzeichnet hat. Minderleistung wird für 5 Jahre zurückgefordert. Der tatsächliche Betrag hängt davon ab, wie gut sich Ihre Investition entwickelt. Die obige aggregierte Kostenschätzung enthält den Durchschnitt der letzten 5 Jahre oder seit der Produkterstellung, wenn es weniger als 5 Jahre sind.
Transaktionskosten : 0,43% des Werts Ihrer Anlage pro Jahr. Hierbei handelt es sich um eine Schätzung der Kosten, die anfallen, wenn wir die Basiswerte für das Produkt kaufen oder verkaufen. Der tatsächliche Betrag hängt davon ab, wie viel wir kaufen und verkaufen.

Carmignac Portfolio Credit A EUR Acc

ISIN: LU1623762843

Empfohlene Mindestanlagedauer

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Hauptrisiken des Fonds

KREDITRISIKO: Das Kreditrisiko besteht in der Gefahr, dass der Emittent seinen Verpflichtungen nicht nachkommt.

ZINSRISIKO: Das Zinsrisiko führt bei einer Veränderung der Zinssätze zu einem Rückgang des Nettoinventarwerts.

KAPITALVERLUSTRISIKO: Das Portfolio besitzt weder eine Garantie noch einen Schutz des investierten Kapitals. Der Kapitalverlust tritt ein, wenn ein Anteil zu einem Preis verkauft wird, der unter seinem Kaufpreis liegt.

WÄHRUNGSRISIKO: Das Währungsrisiko ist mit dem Engagement in einer Währung verbunden, die nicht die Bewertungswährung des Fonds ist.

Der Fonds ist mit einem Kapitalverlustrisiko verbunden.