Carmignac liquidates disappointing thematic fund

Carmignac Gestion is closing its Innovation fund 15 years after it was first launched saying it has ‘not lived up to our expectations’.

This is the second time the leading French firm have ever liquidated one of their funds and in both cases the funds were thematic in style with a strong focus on tech.

The group confirmed to Citywire Global that it had previously closed its Carmignac Info Tech fund back in 2008, almost ten years after it was launched at the height of the dotcom bubble in 1999.

In a letter sent out to investors regarding the latest fund closure, the firm’s deputy director and investment committee member, Eric Le Coz, said:

‘The fund was created with the objective of investing across all innovation sectors, but it has, unfortunately, not lived up to our expectations.’

The thematic fund Carmignac Innovation invested in tech, biotech, healthcare and environment-themed investments and has been managed by Tim Jaksland since April 2009.

‘At the fund’s inception [in February 1997], the most cyclical and defensive sectors, such as IT and healthcare respectively, had a very low level of correlation, which was a major advantage for fund management,’ said Le Coz.

‘Since 2007, the renewed high correlation among these different sectors has prevented the fund manager from effectively adapting asset allocation to changes in the economic cycle.’

‘We do not believe that restricting the investment universe to just one of these sectors would provide a satisfactory solution in terms of the risk/return ratio.’

The fund‘s poor performance over the last few years combined with outflows as a result of its negative returns all contributed to the decision to liquidate it, said the firm.

Its assets now stand at €50 million of which 70% is held by the group’s own fund of funds - Carmignac Profil Réactif 50, 75 and 100.

‘With this being the case, it is with great regret that we have to inform you of our decision to liquidate and close the Carmignac Innovation FCP. This dissolution was approved by the French financial markets authority.’

All subscriptions and redemptions are now suspended. Any assets investors have in the fund will be available from 9^th February 2012.