You can’t always get it right. How have you learned from mistakes?
I’m glad you asked because there’s an important point about this. This isn’t like mathematics where you do your sums and you get a correct answer. You try and manage risk, of course, but you also need a large degree of humility. You are dealing with uncertainty – not just uncertainty regarding how much it’s possible to know about a company, but the companies themselves are dealing with variable economies and competitive situations. You have to be humble enough to admit your mistakes and resilient enough to not let them break you.
What resources at Carmignac do you draw upon in running the fund?
Running the fund alongside me on a day-to-day basis is a dedicated analyst, Seyi Osoba. He works directly with me on the stocks in the fund and is looking at new ideas. Carmignac has many equity funds and teams of global analysts that look at different sectors like healthcare, consumer, technology and so on. When analysts’ ideas make it through my filter, it makes sense to leverage their expertise or at least consult with them on sectoral themes. However, for the vast majority of holdings in the fund, the work is done by Seyi and myself. There are more than 1,000 companies in Europe we could potentially look at, but the fact is we have a very clear, delineated process meaning it’s not as daunting a prospect. We also have a great resource in terms of risk management. We have a front office risk management team that we sit down with every month to discuss our exposures and their sensitivities to certain macro factors or anything else. This team provides daily and weekly risk analysis as well. We also have a team that provides advice on sustainability, which is important because the strategy has a very strong sustainability focus.
What makes the fund a worthy addition to an investor’s portfolio?
There are a lot of European equity funds out there. A lot of them might be described similarly to mine – they invest in high quality companies with a long-term horizon. But we have three key differentiating factors. We quantify what we mean by a high quality business using the metrics of high sustainable profitability and reinvestment. We now have a 19-year track record of using this framework successfully. We have a minor sleeve that focuses on underappreciated innovation, which a lot of funds don’t have. And we go beyond ESG investing because ours is a socially responsible fund that specifically targets certain outcomes. Finally, our performance speaks for itself. Although Europe is now an established asset class, there are so many other asset classes out there. The onus is on European fund managers to deliver returns that matter to people. This fund has delivered returns not just above benchmark and peers but returns that mean something to end-clients. The annualised absolute return since we launched is 12.04%.
Past performance is notnecessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decreaseas a result of currency fluctuations.
