Poor returns and ouflows force Carmignac to shut thematic fund

Carmignac Gestion is closing its Innovation fund after 15 years, telling its investors the vehicle has ‘not lived up to expectations’.

Eric Le Coz, the firm's deputy director, announced the closure in a letter to investors. 

He wrote: ‘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 primarily in technology, biotechnology, healthcare and environment-themed investments.  It 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,’ explained 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 the vehicle, the firm said.

Its assets now stand at around €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 and any assets customers may have in the fund will be available from 9^th February 2012.