Carmignac Portfolio Emergents: Letter from the Fund Managers

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Key figures as of 30/06/2023

  • +22.3%
    Outperformance of Carmignac Portfolio Emergents F EUR Acc

    against its benchmark MSCI EM NR Index over 5 years1.

  • 1st
    Carmignac Portfolio Emergents

    is ranked 1st quartile for performance, Sortino ratio, Sharpe ratio and information ratio within its Morningstar category (Global EM Equity) over 1 and 5 years.

  • 100%
    of the companies we invest in

    have a positive, measurable impact through the goods and services they produce (in line with the Sustainable Development Goals)2.

Carmignac Portfolio Emergents1 lost 0.97% in the second quarter of 2023, against a 0.48% gain in its reference indicator2. This brings the Fund’s year-to-date return to 3.95%, versus 2.61% for its reference indicator. In Q2, emerging markets once again sharply underperformed their peers in the developed world, owing mainly to a drop in Chinese stocks.

Overview of Q2 2023

Chinese equities experienced another quarter of steep losses, primarily on the back of disappointing economic data – especially in the real-estate sector. Investors had been hoping for a strong economic recovery in China after Beijing reversed course on its public health policy in November, shelving its radical zero-Covid policy and instead letting the virus run its course so that the population could reach herd immunity. This was obviously a boon to the country’s economy, and especially its services sector. But so far the rebound has fallen short of expectations. A number of factors are at play, starting with weakness in the country’s real-estate sector. Small and mid-sized cities have a huge backlog of unsold apartments, leaving little scope for a healthy, lasting recovery. In addition, consumer confidence is low, unemployment is unusually high, and manufacturing output contracted in Q2 as a result of the global economic slowdown. Economists have lowered their full-year GDP growth forecasts for the country. All this prompted us to scale back our exposure to China. We sold our stake in ENN Energy, a utility that supplies households and businesses with natural gas in order to reduce the share of coal in China’s energy mix. ENN Energy has been in our portfolio for 11 years, but is now trading at multiples we believe are too high for the company’s growth prospects, which have been pared back in light of the company’s higher market penetration and China’s demographics. On the other hand, we built up our stake in EHang, China’s leading supplier of “flying taxis,” or electric passenger-grade drones. EHang has obtained the very first permit to operate in China and stands to benefit from this newly opened market.

Fund positioning at 30 June 2023

Also in Asia, we increased our stake in Taiwan Semiconductor (TSMC) to just under 10%, the maximum allowable allocation for our Fund. We believe the artificial-intelligence (AI) revolution that drove up the stock prices of US companies like Nvidia and Microsoft isn’t yet reflected in TSMC’s price, even though the firm sits at the head of a near-monopoly on silicon-wafer production for semiconductors and supplies all of Nvidia’s chips. Samsung Electronics (8.4% of the Fund’s assets) has been another big winner of the AI revolution; AI technology requires a lot of memory, including the advanced types – such as high-bandwidth memory – for which Samsung has unique expertise and a dominant market share3.

We shored up our Indian holdings (9.0% of the Fund’s assets9) in Q2 by purchasing additional stock in Kotak Mahindra Bank (2.5% of the Fund’s assets9). Indian equities are some of the priciest in the world, but the country’s banking sector has never been healthier thanks to the excellent work done by its central bank. We intend to invest further in this sector at the next market correction.

We added a new Mexican company to our portfolio – Inmobiliaria Vesta – bringing our country allocation to 6.6% of the Fund’s assets (and our total Latin American allocation to 17.6%9). Vesta operates in the highly lucrative market of industrial real estate. While Mexico’s commercial and office property markets are facing headwinds from online retail and remote working, respectively, industrial real estate is getting a structural boost from nearshoring. US multinationals in particular are increasing their production capacity in Mexico in order to diversify away from China and take advantage of close proximity to the US, cheap natural gas from Texas, and labour costs that are more competitive than those in China. Vesta owns real estate mainly in manufacturing but also in warehousing – with Mercado Libre and Amazon among its customers – meaning it’s also poised to gain from the boom in online retail. What’s more, Vesta has the best corporate governance and capital allocation policy in its sector.

Today our Fund is the most conviction-driven it’s ever been. We now have only 35 positions, and the 10 biggest account for 52.0% of the Fund’s assets. This reflects our desire to focus on those companies we feel the strongest about in this extremely uncertain market climate. Our highly active approach to asset management, coupled with the strength of our portfolio companies’ balance sheets, should enable us to outperform at a time when rate hikes by the main central banks are making things difficult for investors. Seven of our ten biggest holdings are in companies with a positive net debt position, and the only bank on the list – Grupo Banorte (Mexico) – has a 22.9% capital adequacy ratio4.


Socially responsible investment is central to our approach

Since its inception in 1997, Carmignac Emergents has combined what we consider our emerging-market DNA since 1989 with our commitment to strengthening our credentials in socially responsible investment (SRI). In welding together those two areas of expertise, we aim to add value for our investors while having a positive impact on society and the environment.

Classified as an Article 9 fund under the Sustainable Finance Disclosure Regulation (SFDR)6 and was awarded France’s SRI label in 2019 and Belgium’s Towards Sustainability label in 20207.

As an Article 9 Strategy under the SFDR, the Fund will invest mainly in shares of emerging companies that have a positive outcome on environment or society and derive the majority of their revenues or CAPEX from goods and services related to business activities which align positively with UN Sustainable Development Goals (SDGs)8. This sustainable objective will be measured and monitored by the percentage of revenues aligned with the SDGs.

Our portfolio is currently structured around 4 major SRI5 themes that are central to our process:


As a reminder, our socially responsibility approach is based on three pillars:

  • Invest selectively and with conviction, giving priority to sustainable growth themes in underpenetrated sectors and countries with sound macroeconomic fundamentals.

  • Invest for positive impact, favouring companies that deliver solutions to environmental and social challenges in emerging markets and reducing our carbon intensity by at least 50% relative to the MSCI Emerging Markets Index. Our sustainable objective is: >80% Fund’s AUM invested in companies with >50% revenue or CAPEX derived from goods and services positively aligned with at least 1 of 9 targeted United Nations Sustainable Development Goals.

  • Invest sustainably by consistently incorporating environmental, social and governance (ESG) criteria into our analyses and investment decision.

1Cumulative performance. Carmignac Portfolio Emergents F EUR Acc (ISIN: LU0992626480). *KID (Key Information Document) risk scale. Risk 1 does not mean a risk-free investment. This indicator may change over time. Past performance is not a reliable indicator of future performance. Returns may rise or fall as a result of currency fluctuations. Performance figures are net of fees (excluding distributor entry fees). Performance in euros at 30/06/2023.
2Source: Carmignac, FactSet, data on the Fund's alignment with the selected Sustainable Development Goals at 30/06/2023
Benchmark: MSCI EM NR (USD) index, net dividends reinvested, rebalanced quarterly
3Source: Company data at 06/30/2023
4Source: Company data at 06/30/2023
5START's proprietary ESG system combines and aggregates ESG indicators from the market's leading data providers. Due to a lack of standardization and insufficient reporting of certain ESG indicators by listed companies, it is not possible to take into consideration all relevant indicators. START provides a centralized system through which Carmignac delivers its analyses and insights on each company examined, even if the aggregated external data is incomplete. For further information, please visit our website.
6Sustainable Finance Disclosure Regulation (SFDR) 2019/2088: regulation on sustainability disclosure in the financial services sector. For more information, please visit EUR-lex
7Carmignac Portfolio Emergents has been awarded the French and Belgian SRI labels. ; ;
8The sustainable investment objective is to invest primarily (i.e. more than 50% of the Fund's net assets) in equities of companies that derive more than 50% of their sales from goods and services related to business activities that are positively aligned with one of the 9 (out of 17) United Nations Sustainable Development Goals ("the 9 SD Goals") selected for this Fund. For more information on the United Nations Sustainable Development Goals, please visit
9Data as of 30/06/2023

Carmignac Portfolio Emergents

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Carmignac Portfolio Emergents F EUR Acc

ISIN: LU0992626480

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Main risks of the Fund

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.

Carmignac Portfolio Emergents F EUR Acc

ISIN: LU0992626480
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 (YTD)
Year to date
Carmignac Portfolio Emergents F EUR Acc +6.45 % +3.92 % +1.73 % +19.76 % -18.22 % +25.53 % +44.91 % -10.29 % -14.35 % +9.79 % +5.61 %
Reference Indicator +11.38 % -5.23 % +14.51 % +20.59 % -10.27 % +20.61 % +8.54 % +4.86 % -14.85 % +6.11 % +10.79 %

Scroll right to see full table

3 Years 5 Years 10 Years
Carmignac Portfolio Emergents F EUR Acc -5.58 % +7.58 % +5.49 %
Reference Indicator -1.81 % +4.35 % +5.34 %

Scroll right to see full table

Source: Carmignac at 28/06/2024

Entry costs : We do not charge an entry fee. 
Exit costs : We do not charge an exit fee for this product.
Management fees and other administrative or operating costs : 1,32% of the value of your investment per year. This estimate is based on actual costs over the past year.
Performance fees : 20,00% when the share class overperforms the Reference indicator during the performance period. It will be payable also in case the share class has overperformed the reference indicator but had a negative performance. Underperformance is clawed back for 5 years. The actual amount will vary depending on how well your investment performs. The aggregated cost estimation above includes the average over the last 5 years, or since the product creation if it is less than 5 years.
Transaction Cost : 0,37% of the value of your investment per year. This is an estimate of the costs incurred when we buy and sell the investments underlying the product. The actual amount varies depending on the quantity we buy and sell.
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Marketing communication. Please refer to the KID/KIID, prospectus of the fund before making any final investment decisions. This document is intended for professional clients.

This material may not be reproduced, in whole or in part, without prior authorisation from the Management Company. This material does not constitute a subscription offer, nor does it constitute investment advice. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. This material has been provided to you for informational purposes only and may not be relied upon by you in evaluating the merits of investing in any securities or interests referred to herein or for any other purposes. The information contained in this material may be partial information and may be modified without prior notice. They are expressed as of the date of writing and are derived from proprietary and non-proprietary sources deemed by Carmignac to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Carmignac, its officers, employees or agents.

Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency-hedged.

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  • In the United Kingdom: the Funds’ respective prospectuses, KIIDs and annual reports are available at, or 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 document was prepared by Carmignac Gestion, Carmignac Gestion Luxembourg or Carmignac UK Ltd. FP Carmignac ICVC (the “Company”) is an Investment Company with variable capital incorporated in England and Wales under registered number 839620 and is authorised by the FCA with effect from 4 April 2019 and launched on 15 May 2019. FundRock Partners Limited is the Authorised Corporate Director (the “ACD”) of the Company and is authorised and regulated by the FCA. Registered Office: Hamilton Centre, Rodney Way, Chelmsford, Essex, CM1 3BY, UK; Registered in England and Wales with number 4162989. Carmignac Gestion Luxembourg SA has been appointed as the Investment Manager and distributor in respect of the Company. Carmignac UK Ltd (Registered in England and Wales with number 14162894) has been appointed as a sub-Investment Manager of the Company and is authorised and regulated by the Financial Conduct Authority with FRN:984288.

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