At Carmignac, we strive to find attractive long-term investment opportunities and deliver them to our investors; and we believe that it takes more than just financials to meet this objective. For us, socially responsible investing (SRI) is ingrained in our philosophy, and one example of this is the FP Carmignac European Leaders fund.
FP Carmignac European Leaders is a large cap equity fund that invests in continental Europe. It holds just 30-40 stocks(1); high-conviction names chosen for their long-term growth prospects. To find what he considers to be Europe's finest, Carmignac's Head of European Equities Mark Denham follows a disciplined investment process which includes both financial and non-financial metrics.
Amongst the 1,500 companies that make up the Fund's investment universe, Mark looks for those with truly attractive long-term potential. For him, these must exhibit high sustainable profitability and continuous reinvestment for future growth, but also strong social responsibility credentials.
Mark believes that considering socially responsible metrics provides invaluable assistance to mitigate risk as well as identify investment opportunities: how a company is managed, how it interacts with its shareholders and staff, what impact it has on the planet are some of the many elements that should be considered when assessing a company's sustainability over the long-term.
The Fund's path to sustainability
The bottom-up analysis, initially implemented through a financial screen and scoring process, identifies companies with the best long-term growth prospects, as demonstrated by their high, sustainable profitability, combined with internal or external reinvestment.
Then two important filters further refine the number of stocks: negative screening, to avoid investments in companies operating in controversial sectors, such as coal, tobacco, conventional arms or unconventional energy production(2), and positive screening, to select companies which have significant and measurable positive impact on society or the planet(3).
Then, with the support of his European equity team and the wider investment team, Mark thoroughly analyses companies' ESG profile through proprietary and third-party ESG research as well as meetings with the management in order to identify the risks and opportunities. To ensure continuous alignment between Mark's conviction and the companies in portfolio, the investment cases are regularly reviewed, notably regarding the changing nature of ESG risks.
Being socially responsible is also about helping to change the mindset of companies in which the Fund is invested: Mark and the team cultivate a meaningful dialogue with businesses and aim to participate in all possible voting actions to improve their behaviour and to encourage them to adopt best practices, with regards to how they mitigate risk and create a positive impact.
(1) As of 31/10/2019, the portfolio held 37 stocks. Portfolio composition may change at any time and without previous notice. (2) The Fund's full list of exclusions is available on demand to the asset management company. Exclusions lists are updated on a quarterly basis. (3) We assess companies' impact on society or the planet through a positive impact filter based on the United Nations' Sustainable Development Goals (SDG).
Risk scale 5 from the KIID (Key Investor Information Document) for the A GBP acc share class. Risk 1 does not mean a risk-free investment. This indicator may change over time. The risks and fees are described in the KIID. 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. 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.
PROMOTIONAL MATERIAL. This document may not be reproduced, in whole or in part, without prior authorisation from the Investment Manager. This document does not constitute a subscription offer, nor does it constitute investment advice. Past performance is not necessarily indicative of future performance. 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 Financial Conduct Authority (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: Second Floor, 52-54 Gracechurch Street, London EC3V 0EH; Registered in England and Wales with number 4162989. Carmignac Gestion Luxembourg SA, UK Branch (Registered Office: 2 Carlton House Terrace, London, SW1Y 5AF. Registered in England and Wales with number FC031103, CSSF agreement of 10/06/2013) has been appointed as the Investment Manager and distributor in respect of the Company. Access to the Company may be subject to restrictions with regard to certain persons or countries. The Company is not registered in North America, in South America, in Asia nor is it registered in Japan. The Company has not been registered under the US Securities Act of 1933. The Company 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/or FATCA. The Company's prospectus, KIIDs and annual reports are available at www.carmignac.com or upon request to the Investment Manager. The KIID must be made available to the subscriber prior to subscription. This material was prepared by Carmignac Gestion Luxembourg SA and is being distributed in the UK by the Investment Manager.
