08/03/2011Elite grade for Carmignac Patrimoine
Morningstar renews its trust in Carmignac Patrimoine giving it again the best rating ELITE.
"This balanced allocation fund is one of our favourites.
The fund benefits first of all from the solid experience of its star manager, Edouard Carmignac. Rose Ouahba comanages the fund and is responsible for the regulatory portion. She has 11 years of experience in this area, and both apply the best ideas of a solid team of managers and analysts, recently reinforced by the recruitment of an experienced financials analyst. Conscious of the large size of the fund, however, they select only shares with sufficient liquidity. Therefore, the portfolio's stocks are generally in the large-cap sector of the Morningstar Style Box, and the bond portfolio is diversified into more than 100 issues.
The fund pursues a clear objective to maximise absolute performance over the long term. The allocation of assets among shares, bonds, and cash as well as the selection of shares within each segment integrates a strong topdown dimension. The strategy rests on identification, usually upstream and not necessarily in the current trend, of investment themes with medium- and long-term growth potential. The portfolio's positioning reflects the team's strong convictions (Anglo-Saxon banks, raw materials,emerging markets for stocks/private bonds, and American indexed obligations in the debt area). Another fundamental factor that distinguishes this offering is its systematic use of hedging and cash management policies to mitigate market fluctuations. These are actively managed. The fund may not invest more than 50% of its assets in stocks, but the net exposure to the market can fall to zero, as was the case at the end of 2008. This great flexibility compared with competitive offerings has been used to great effect--most of the other funds in this category have a minimum exposure to stocks. The fund offers remarkable resistance in a falling market. On the other hand, there is a risk that the fund will underperform in a short-term rebound that is not anticipated by the managers. The fund is therefore targeted mostly to longterm investors with a moderate risk profile.
The reasonable expenses are adjusted with a performance fee, which aligns the interests of investors with those of the manager. This is unfortunately not the case for the deducted turnover commissions that are also taken, which can inflate the total expenses on investments. Despite this handicap, the funds have constructed an excellent performance history and are invariably classed within the first decile of the category over three, five, and 10 years at the end of September 2009.
In view of the size of assets under management, it would be reasonable for the fund to pass economies of scale on to investors. Nevertheless, the team's experience and the solid approach followed make this offering one of the best, and we maintain its Elite grade.
© 2009 Morningstar
