Euro and Japan bets fuel Carmignac funds' outperformance
The Abe effect and euro strength leads French firm to increase its exposure to the single currency and boost its allocation to Japan in two of its biggest funds.
by Atholl Simpson on Jan 09, 2013 at 09:52
Carmignac Gestion has considerably increased its exposure to the euro in its two biggest funds and has also added Japanese names to its portfolios.
In its latest monthly investment letter, the French firm said the euro currency had been a good contributor to the Carmignac Patrimoine - run by Edouard Carmignac, Rose Ouahba and Frédéric Leroux - and Carmignac Investissement - run solely by Edouard Carmignac - funds in December.
'The euro continued its increase over the month against the main developed countries currencies - US dollar, British sterling and Japanese yen,' the firm said. 'We benefited from this momentum after increasing our exposure to the currency at the start of the month.'
The €23.7 billion Patrimoine fund's euro currency exposure was increased from 60% at the end of November to 72% at the end of December 2012.
However, the most dramatic rise came in the company founder's € 7.2 billion Investissement fund which almost doubled its euro exposure in December from 29% to 52%.
The funds' equity investments were also strong contributors to the funds' performance in December, notably thanks to the rise of the Japanese market (+10% for the Nikkei 225) and some emerging market benchmarks.
The Brazilian Bovespa, Russian RTS and Chinese Hong Kong Seng China Enterprises indices rose more than 6% in December, according to the firm.
'Our stocks exposed to the emerging markets particularly benefited from this trend. Moreover we also believe that the weakening of the yen and the pro-business agenda of Japan's new majority government will be favourable to Japanese companies.'
Both the Investissement and Patrimoine funds have increased their exposure to the Nikkei and Topix indices as well as adding car maker Toyota and banking group Nomura to their portfolios.
Over the past five years to the end of December the Carmignac Patrimoine has posted returns of 31.6% while its benchmark, LCI MSCI World Free/Citigroup WGBI TR (50:50), has risen 27.6%.
During the same period the Carmignac Investissement returned 13.5% while its benchmark, MSCI AC World TR EUR, rose 7.55%.
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