Carmignac Portfolio Grandchildren celebrates its four-year anniversary

Compounders are high-quality companies that choose to reinvest their earnings sustainably to generate future growth. By investing in compounders, the Fund aims to benefit from profitable business models over the long term. By ploughing capital back into their business instead of paying dividends, compounders create additional growth engines, for example through innovation or product development, which allows the company to live on over economic cycles and generations.

We can observe from the graph above that those compounders in the portfolio since launch have generated higher average earnings per share than the MSCI World, reflecting potential better profitability over the long term. In this way, the Fund benefits from the compounding effect.

Thanks to its structured and quantifiable process, Carmignac Portfolio Grandchildren identifies companies that possess the ability not only to grow their earnings consistently over time but also to effectively execute their strategies due to their operational excellence. This enables us to build up strong convictions while optimising the weight of our positions based on the economic cycle to form a concentrated portfolio of 41 stocks with an active share of 86% (at the end of May 2023).

Eli Lilly, Colgate, SAP and L’Oréal, for example, have demonstrated their resilience by adapting their business model to changes in their environment over time. Their ability to adapt and continue to invest, even in difficult times, makes them major players in their sectors. In our view, this ability can also lead them to maintain their position in the future.

By investing in compounders, Carmignac Portfolio Grandchildren aims to achieve long-term outcomes, building a legacy not only for the investors themselves but one that can be passed on from one generation to the next.

With this objective of transmission through the generations, we are convinced that, as investors, it is our responsibility to create value for our clients through a sustainable approach, and to have a positive footprint for future generations. We strive to identify firms generating positive change based on the Sustainable Development Goals (SDGs) defined by the United Nations.

The Fund also aims to reduce its carbon emissions relative to its reference indicator (MSCI WORLD, USD, Reinvested Net Dividends).

On its fourth anniversary, Carmignac Portfolio Grandchildren has posted solid annualised net performance since launch, outperforming its reference indicator and its category. This puts the Fund in the top quartile since the start of 2023, over 1 year, 3 years and since launch. This positive performance is underpinned by the sound business models of the companies in which the Fund invests, which generate positive underlying results over the long term. A further example of the benefits of compounding.

Carmignac Portfolio Grandchildren is a fund designed to withstand different market situations over the long term. Given the economic slowdown taking shape, the Fund appears to be well positioned thanks to its focus on quality companies that are generating positive and foreseeable cash flows regardless of economic growth.