Eric Le Coz from leading Parisian asset manager Carmignac Gestion thinks that after the rallies of the past six months, a pause while investors wait for economic clarity is likely.
‘After such a run, we consider that a period of equity market consolidation would be reasonable,’ he said. ‘In particular, the US and eurozone markets look correctly valued, without being excessive. A pause is therefore possible in a context where investors will be waiting for confirmation of the improvement in the economic situation, especially in the United States. That is the most likely scenario.’
Le Coz is a member of the investment committee at Carmignac, which has become one of Europe’s leading boutiques thanks to the strong performance of funds such as Carmignac Patrimoine and Carmignac Investissement. The firm’s fund range has long had a tilt towards emerging markets (see article here), and Le Coz remains positive on the region.
‘The emerging markets, which have gained a lead over the developed markets, have already underperformed against them in August, and some, particularly in Asia, have even lost ground,’ he said. ‘Nevertheless we are remaining reasonably optimistic. Faced with developed economies that are still convalescing and a context of continuing deflation, the central banks and governments of the G20 countries will go on conducting expansionist – or at least accommodating – policies, which would be a favourable context for the emerging economies whose recovery seems sustainable.’
Consequently, equities, and in the first place the investment themes related to emerging domestic growth, such as consumption, investment and raw materials, should, after this late-summer pause, constitute a further and appreciable performance driver for all our funds.’
AAA-rated Edouard Carmignac, the founder of the firm and manager of its two flagship products, is ranked 2/411 in the global equity sector over five years, having returned 90% with the Investissement fund while the average manager in the sector has produced zero returns.