Portfolio Adviser • PA Mag December 2020 v2 • DON’T MISS OUT ON EUROPE

Investors can generate strong returns in European equity markets, despite being a region of modest economic growth and not necessarily home to the most well-known tech companies

Citywire AAA-rated1 Mark Denham is convinced of the region’s potential and encourages investors to share his view. “The biggest challenge I’ve faced since I started my career has been to convince investors that Europe is a good region for them to invest their money in”, he explains.

Mark seems to be proving his point: not only is he AAA-rated by Citywire for his 3-year risk-adjusted performance, he has also succeeded in delivering a +33% return to investors of FP Carmignac European Leaders since the fund’s launch in May 2019 – outperforming the comparator benchmark by 32% and beating 97% of peers in its IA sector Europe excluding UK2.

Covering European equities since 1993, Mark has learnt to see beyond the clouds to find Europe’s finest companies – the ‘European leaders’ of today and tomorrow. “The golden rule for investing in European equities is to be fully active and not follow index benchmarks,” says Denham.

With a wide universe of around 1,600 European companies with a market capitalisation of over €1bn, it is a common strategy to rely on index heavyweights; but many of these have a modest growth outlook.

Therefore, he believes you must go off the beaten track to find real growth areas – as demonstrated by the Fund’s 81% active share3.

The investment process of FP Carmignac European Leaders is one which Mark built back in 2003 and has been finetuning ever since to make it as effective as possible.

He is a stock picker who understands businesses from the bottom up and selects companies for their individual characteristics and prospects, rather than taking a top-down view or emphasising sectors.

“Whatever the background, I always look for companies which can grow under their own steam and are less reliant on the economic background to generate good long-term returns,” he says.

As such, Mark focuses on companies that have high sustainable profitability and that reinvest these cash flows for the future. This allows their capital base to expand, leading to a compounding effect over the long-term. This compounding effect is often underestimated by investors with a short-term outlook and is instead a reward for those who are patient.

He also believes strong socially responsible credentials are an important factor to identify companies with good long-term prospects. “I think it’s a mistake to consider ESG or SRI as a separate part of the process, as it is just as important as financial criteria in assessing which businesses have the best long-term prospects,” he says.

He integrates ESG criteria when assessing the potential returns and risks of each company but also excludes several sectors on ethical grounds and prioritises companies which have a positive contribution to society or the environment.

This powerful combination of financial metrics and SRI filters proved efficient during the Covid crisis. During this turbulent period, Mark did not stray from his robust investment process, and his discipline paid off : after February’s market collapse, FP Carmignac European Leaders recovered much faster than its comparator benchmark and is now trading close to its high, reached in early November 20204.

1 Across all funds he is managing to 30/10/2020. Source & Copyright: Citywire. Citywire Fund Manager Ratings and Citywire Rankings are proprietary to Citywire Financial Publishers Ltd (“Citywire”) and © Citywire 2020. All rights reserved. The reference to a ranking or prize is no guarantee of the future results of the UCIS or the manager.

2For the A GBP share class. ISIN: GB00BJHPHZ49. Daily returns in GBP from 5/15/2019 to 10/30/2020. 2019 Performance: +18.21% for the fund versus +8.77% for the comparator benchmark (MSCI Europe Ex UK Net Total Return USD). Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decrease as a result of currency fluctuations for the shares which are not currency hedged.

4Source: Carmignac, Bloomberg, 11/20/2020. FP Carmignac European Leaders recovered from the drawdown recorded between February and March 2020 in 51 days versus 168 days for its comparator benchmark, the MSCI Europe Ex UK Net Total Return USD index, converted to GBP end of day. Performance of the A GBP acc share class. Past performance is not necessarily indicative of future performance. The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency hedged.

Mark Denham is head of European equities at Carmignac and Fund Manager of, amongst other funds, ‘FP Carmignac European Leaders’. Mark joined Carmignac in September 2016 from Aviva Investors, where he was fund manager and head of pan-European equities. Before joining Aviva Investors in 2003, he occupied various roles including director of European equities at Insight Investment and fund manager at National Mutual Life. He graduated from Cambridge University with a degree in natural sciences and holds a postgraduate certificate in advanced mathematics.

PROMOTIONAL MATERIAL. For professional investors only. 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. 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. Carmignac Gestion – 24 place Vendôme – F-75001 Paris. Tel: (+33) 01 42 86 53 35 – Investment management company approved by the AMF – Public limited company with share capital of € 15,000,000 – RCS Paris B 349 501 676. Carmignac Gestion Luxembourg – City Link – 7, rue de la Chapelle – L-1325 Luxembourg – Tel: (+352) 46 70 60 1 – Subsidiary of Carmignac Gestion – Investment fund management company approved by the CSSF – Public limited company with share capital of €23,000,000 – RC Luxembourg B 67 54.

* 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 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.