Carmignac Portfolio Sécurité

The US Federal Reserve delivered a more dovish message than expected at its September meeting, cutting its key rate by -0.5%.

Growth data nevertheless exceeded expectations across the Atlantic, both in terms of unemployment, which declined to 4.2%, and consumer resilience, with retail sales accelerating by +0.1%.

Headline inflation continued to slow to +2.5% year-on-year on the back of falling commodity prices, while core inflation remained stable at +3.2%.

For its part, the European Central Bank cut its key rate by -25bp against a backdrop of disappointing economic data, both in terms of leading indicators and the zone's future growth prospects.

Among other central banks, the Bank of Japan opted for a pause in its rate hike cycle, while the Brazilian central bank raised its key rate by a quarter point.

At the end of the period, the Chinese authorities announced a series of measures aimed at curbing the slowdown in the Chinese economy and boosting market sentiment.

The Fund delivered a positive performance in line with its reference indicator.

In an environment marked by a sharp easing in interest rates, our preference for short-term rates was positive, marked by a steepening of the yield curves.

In addition, the portfolio benefited from its credit carry strategies, with a positive contribution from our financial sector bonds, slightly offset by our hedges aimed at reducing our exposure to the riskiest part of the market.

Finally, the portfolio continues to benefit from the good performance of our selection of Collateralized Loan Obligations (CLOs) and our exposure to money market instruments.

The relative resilience of the various economies, characterised by a soft landing for the European and US economies and inflation gradually returning towards target, should enable the ECB and the Fed to continue their rate-cutting cycles.

However, given the presence of political and geopolitical risks and the increasingly tight valuations on some markets, the portfolio is maintaining a balanced positioning with a duration that has been maintained at around 2 over the period.

On the one hand, a significant allocation to credit, mainly invested in short-term, highly-rated corporate bonds and CLOs, offering an attractive source of carry and a low beta relative to market volatility.

On the other hand, we have a long position in the short end of the German curve, which should benefit from a flight to quality in an unfavourable scenario, but also from the central banks' rate cuts cycle.

We are also maintaining protective positions on the credit market (iTraxx Xover), with markets trading at tight levels in a geopolitical context that remains uncertain.

Finally, we have an allocation to money market instruments, which represent an attractive source of carry with limited risk.