When you are empowered to be focussed, active and selective, you can capture potential - even in a European market where the political and social environment is evolving, change provides lots of opportunity amongst the challenges.
Reading beyond the headlines and positively changing perceptions.
The latest economic growth forecasts from the IMF underline Europe's challenges. While the US is expected to grow 2.4% in 2019, and China 6.1%, the euro area is predicted to grow by 1.2% - relatively modest by comparison. There are also local issues, with Brexit, nationalistic politics and the social unease of immigration all adding to the uncertainty in the region (1). Technology developments lag when compared to the US or emerging markets, where companies such as Apple, Amazon, Tencent and Alibaba have become giants over the decade. However, despite the headlines there are many reasons to be positive.
Many factors enhance the region's investment potential if you know where to look.
European equity markets have produced returns on average of 7% to 8% compound per annum over the past three years and Europe is the home of world-leading businesses in a variety of sectors; from fashion to food. The inventive streak we see in the US and emerging markets is prevalent in Europe too. For example, did you know the number of technology flotations in the region surpassed the amount of US IPOs in the past couple of years? That one of the leading wind turbine manufacturers is European? Or that there are many very innovative companies within Europe's industrial sector? If you look more closely, there is much to be excited about in Europe.
To capture the finest of these opportunities you must be selective, not distracted.
This positive outlook drives the longstanding mission of Mark Denham, Head of European Equities at Carmignac and Fund Manager of the FP Carmignac European Leaders Fund. Rather than being distracted by the macroeconomic environment, Mark uses a bottom-up approach to focus on secular opportunities. He looks for firms which can grow under their own steam, irrespective of the macro environment and which demonstrate high and sustainable profitability. They must also have strong social responsibility credentials and must continuously reinvest their profits for their future growth. From a universe of around 1,500 European companies, only 30-40 stocks make the final cut (2) - in our opinion, Europe's finest.
Risk scale: 5 for the A GBP acc share class. Risk scale from the KIID (Key Investor Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time. The Company presents a risk of loss of capital. 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.
(1) Source: IMF, World Economic Outlook, October 2019. (2) As of 30/09/2019, the portfolio held 36 stocks. Portfolio composition may change at any time and without previous notice.
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.