Quality and Sustainable Investment: Chicken or Egg
Quality and sustainable investment are closely intertwined, with certain studies even suggesting that three quarters of the outperformance of ESG strategies can be directly attributed to the quality factor1. However, although the correlation is significant, the causal relationship between the two does not appear to be clearly established. At Carmignac, we firmly believe that quality and sustainable investment are two sides of the same coin that mutually strengthen each other in a virtuous cycle.
The need to define quality
For over 20 years, Mark Denham, co-manager of the fund, has asserted that long-term performance relies solely on the ability to select companies with the best prospects. These companies, which Mark refers to as 'quality', must meet specific criteria:
They must be able to generate high and stable profits over time, which they can
reinvest to sustain their growth trajectory.They must also have a positive impact on the environment and society.
This conviction has been quantified through a detailed investment process. Over time, this process has been enriched by adapting to the increasing availability of extra-financial data. However, the initial philosophy of excluding the worst-performing companies and rewarding the most promising on financial and extra-financial criteria has remained unchanged.
Quality and sustainable investment for the benefit of:
L'Oréal
The company has successfully decoupled its growth from its negative impact on the environment, reducing its absolute emissions by 91% compared to 2005, while increasing its production volumes by 45% and maintaining its operating margin between 15 and 20%.Demant
The other Danish health giant is a global group that specializes in hearing care. Its remarkable growth has been driven by numerous innovations since 1904. We are committed to supporting them in improving their governance and encouraging them, like their products, to listen more closely to their investors.Quality companies generally have healthy balance sheets, stable cash flows and lower debt levels.
Moreover, they possess ample resources to invest in and adapt to evolving market conditions, such as emerging technologies, regulatory changes, and shifting consumer expectations. Consequently, they face a lower risk of their business model becoming outdated or obsolete.
Schneider Electric
The company contributes to the security of electricity supply for the grid and buildings, and offers services to optimise their energy efficiency. The emissions avoided by their customers have tripled over the last 3 years, reaching 440 mtCO2e, higher than France's carbon footprint in 2023 (385 mtCO2e – territorial emitted).A strategy that combines quality and sustainable investment
Carmignac P. Grandchildren is an equity fund that has capitalised on the process established by Mark two decades ago. This Article 9 fund, launched 5 years ago, offers a distinctive approach by investing in quality companies across the developed world. As an all-round fund, it is distinguished by:
| Concentrated exposure to quality companies across developed countries | 43 portfolio holdings |
| A clear and coherent sustainable framework, enabling you to have a clear understanding of your investments | 100% of our investments are aligned with the UN SDGs (ex-cash) |
| Reducing greenhouse gas emissions | < 50% Carbon emissions than its benchmark |
| Total transparency on both the financial and non-financial dimensions of the portfolio | 3 ESG reporting at your disposal |
| Exposure to companies capable of generating high returns on their investments | 23% Return on equity of the fund compared to 14% for the MSCI World |
| Outstanding long-term performance | +89% vs 87% for the MSCI World over the last 5 years |
| A recognised sustainable approach |
*https://www.lelabelisr.fr/en/;
https://www.towardssustainability.be/; https://www.febelfin.be/fr; Socially Responsible Investment, https://www.carmignac.fr/fr_FR/nous-connaitre/investissement-socialement-responsable-isr-1252. SRI and Febelfin labels obtained in January and February 2020 respectively. SFDR fund classification: Article 9 from 1 January 2022. Sustainable Finance Disclosure Regulations (SFDR) 2019/2088. For more information, please refer to EUR-lex..
Past performance is not necessarily indicative of future performance. Returns may increase or decrease according to currency fluctuations for equities that are not hedged against currency risk. Performance is net of fees (excluding any entry fees charged by the distributor).
Carmignac Portfolio Grandchildren
An intergenerational Fund focused on quality, sustainable companiesDiscover the Fund pageCarmignac Portfolio Grandchildren A EUR Acc
- Recommended minimum investment horizon
- 5 years
- Risk indicator*
- 4/7
- SFDR - Fund Classification**
- Article 9
*Risk Scale from the KID (Key Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time. **The Sustainable Finance Disclosure Regulation (SFDR) 2019/2088 is a European regulation that requires asset managers to classify their funds as either 'Article 8' funds, which promote environmental and social characteristics, 'Article 9' funds, which make sustainable investments with measurable objectives, or 'Article 6' funds, which do not necessarily have a sustainability objective. For more information please refer to https://eur-lex.europa.eu/eli/reg/2019/2088/oj.
Main risks of the fund
Fees
- Entry costs
- 4,00% 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
- 1,70% 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
- 0,26% 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.
Performance
| Carmignac Portfolio Grandchildren | 15.5 | 20.3 | 28.4 | -24.2 | 23.0 |
| Reference Indicator | 15.5 | 6.3 | 31.1 | -12.8 | 19.6 |
| Carmignac Portfolio Grandchildren | + 6.0 % | + 12.5 % | + 14.0 % |
| Reference Indicator | + 11.1 % | + 13.4 % | + 14.8 % |
Source: Carmignac at 29 Nov 2024.
Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor).
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