Carmignac Sécurité : Letter from the Fund Manager

  • +0.25%

    Carmignac Sécurité's performance
    in the 2nd quarter of 2021 for the A EUR Acc share class.

  • -0.12%

    Reference indicator's performance
    in the 2nd quarter of 2021 for ICE BofA ML 1-3 years Euro All Government Index (EUR).

  • +0.55%

    Performance of the Fund Year-to-Date
    versus -0.36% for the reference indicator

Quarterly performance review

Financial markets became a good deal harder to fathom in the second quarter of the year. Expectations for a vigorous global economic upswing – buoyed by the prospect of economic re-opening as vaccination campaigns gained traction and central banks let inflation overshoot their targets – had driven interest rates up in the first quarter. But that trend had reversed by late March in the United States and mid-May in the eurozone.

There were several factors behind that reversal. For starters, US employment data came in well below economists’ forecasts, while US and Chinese inflation surprised to the upside. In addition, the less dovish stance adopted by the Federal Reserve (Fed) caught the investment community on the back foot, which accentuated the yield-curve flattening under way. Financial-market participants brought forward their rate-hike expectations (with 2-year Treasury yields gaining 8 basis points during the quarter), and now fear the Fed may get monetary policy wrong, resulting in a sharp slowdown in economic growth (which explains why 30-year yields dropped by 33 basis points over the same period). And though realised inflation has climbed significantly, investors don’t believe the trend will continue. They attribute the current bout of inflation to a combination of catch-up from last-year and supply bottlenecks in a recovery that has taken off too fast. The most striking example of these bottlenecks is the semiconductor shortage, which has hamstrung the auto industry. Europe’s fixed-income markets have channelled those in the US, though with a lag and to a more limited extent. The rise in German bond yields during the first part of the quarter wasn’t wiped out after all. The 10-year yield ended the period up 10 basis points at –0.21%¹.

One might have expected such an unintelligible state of play to increase market volatility – usually bad news for credit investors. Except it didn’t. Volatility has stayed very low, and thus supported carry strategies, including in corporate bonds. In the euro market, credit spreads for investment-grade issuers tightened by an average of 7 to 8 basis points, with the result that this asset class added capital gains to gains from the carry trade. The more speculative corner of the market did even better during the quarter, with spreads narrowing by some 20 basis points and the European high-yield bond index climbing about 1.45%.

How is the fund positioned?

We substantially reshuffled the Carmignac Sécurité portfolio during the second quarter.

  • First, we upped our exposure to corporate credit in continuity with the approach we initiated at the end of the first quarter of 2021. Rising yields since the beginning of the year enabled us to hunt down absolute yields offering attractive carry opportunities.
  • Second, we re-introduced Italian government paper into our portfolio starting in mid-May. At the end of the quarter, the modified duration of our Italian holdings, spanning government and corporate bonds, stood at roughly 1.
  • Our exposure to CLOs (Collateralised Loan Obligations) likewise increased – a first in several quarters. The primary market offered attractive opportunities in top-rated tranches that moved us to raise that exposure by more than 1 percentage point to about 7.5% of the portfolio.
Source: Carmignac, 25/06/2021
*Include derivatives

In contrast, we stuck with our short bias on fixed income in the US and the UK, two economies that are further along in the business cycle than the eurozone. The Fund’s total modified duration at the end of the quarter was approximately 2, up from 1 at the end of March. That higher modified duration enabled us to cushion the impact of the yield reversal that occurred during the period.

What is our outlook for the coming months?

Our portfolio is thus made up of long positions in assets offering good spreads (chiefly corporate credit and Italian bonds), where the interest-rate risk is hedged in part by short positions in British and American sovereigns and by swaps. Even if interest rates were to head back upwards, the increase wouldn’t be large enough to put pressure on risk assets. We believe the major central banks will avoid undermining the economic recovery by acting too fast and/or too vigorously as they did in late 2018. Late-cycle phases (and we’re likely nearing the end of a cycle of extreme monetary-policy easing) are often accompanied by financial-market volatility. That will call for even greater flexibility in how we at Carmignac Sécurité manage our portfolio in the months to come.

Carmignac Sécurité

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Carmignac Sécurité AW EUR Acc

ISIN: FR0010149120
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 (YTD)
Year to date
Carmignac Sécurité AW EUR Acc +1.69 % +1.12 % +2.07 % +0.04 % -3.00 % +3.57 % +2.05 % +0.22 % -4.75 % +4.06 % +1.69 %
Reference Indicator +1.83 % +0.72 % +0.30 % -0.39 % -0.29 % +0.07 % -0.15 % -0.71 % -4.82 % +3.40 % -0.08 %

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3 Years 5 Years 10 Years
Carmignac Sécurité AW EUR Acc +0.18 % +1.10 % +0.68 %
Reference Indicator -0.68 % -0.52 % -0.13 %

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Source: Carmignac at 31/05/2024

Entry costs : 1,00% of the amount you pay in when entering this investment. This is the most you will be charged. Carmignac Gestion doesn't charge any entry fee. The person selling you the product will inform you of the actual charge.
Exit costs : We do not charge an exit fee for this product.
Management fees and other administrative or operating costs : 1,11% of the value of your investment per year. This estimate is based on actual costs over the past year.
Performance fees : There is no performance fee for this product. 
Transaction Cost : 0,24% 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.

Carmignac Sécurité AW EUR Acc

ISIN: FR0010149120

Recommended minimum investment horizon

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Main risks of the Fund

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.

(1) The reference indicator changed on the 02/01/2021 to ICE BofA ML 1-3 Y Euro All Government Index (EUR) before it was the EuroMTS 1-3 years index (EUR).

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.

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. The reference to a ranking or prize, is no guarantee of the future results of the UCIS or the manager.

Morningstar Rating™ : © 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.

Access to the Funds may be subject to restrictions regarding certain persons or countries. This material is not directed to any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the material or availability of this material is prohibited. Persons in respect of whom such prohibitions apply must not access this material. Taxation depends on the situation of the individual. The Funds are not registered for retail distribution in Asia, in Japan, in North America, nor are they registered in South America. Carmignac Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. 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 FATCA. The risks, fees and ongoing charges are described in the KID (Key Information Document). The KID must be made available to the subscriber prior to subscription. The subscriber must read the KID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds present a risk of loss of capital.

The Funds’ prospectus, KIDs, NAVs and annual reports are available at, or upon request to the Management Carmignac Portfolio refers to the sub-funds of Carmignac Portfolio SICAV, an investment company under Luxembourg law, conforming to the UCITS Directive. The French investment funds (fonds communs de placement or FCP) are common funds in contractual form conforming to the UCITS or AIFM Directive under French law.

  • In France, Luxembourg, Sweden: The risks, fees and ongoing charges are described in the KID (Key Information Document). The KID must be made available to the subscriber prior to subscription. The subscriber must read the KID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds present a risk of loss of capital. The Funds’ prospectus, KIDs, NAV and annual reports are available at, or upon request to the Management.

  • 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.

  • In Switzerland: the prospectus, KIDs and annual report are available at, or through our representative in Switzerland, CACEIS (Switzerland), S.A., Route de Signy 35, CH-1260 Nyon. The paying agent is CACEIS Bank, Montrouge, Nyon Branch / Switzerland, Route de Signy 35, 1260 Nyon.

The Management Company can cease promotion in your country anytime. Investors have access to a summary of their rights in English on the following links: UK ; Switzerland ; France ; Luxembourg ; Sweden.