The Tangwall Campagin. Carmignac is one of the main players in asset management in Europe. A sector often associated with the world of luxury and great fortunes. Who are your customers?
Maxime Carmignac. Our main mission is to anticipate and manage the needs of working Europeans. It could be a trader in Angers, a doctor in Turin, or a professor in Munich. Originally, when my father created our Carmignac Patrimoine fund in 1989, the word “heritage” had its full meaning: giving savers the ability to build up a fund that could be combined with their retirement. For my part, I wanted to launch a Private Equity fund to allow our clients, who often entrust us with their life savings, or even the inheritance of their children and grandchildren, to invest in the real economy, in the SMEs and mid-sized companies which make up the economic fabric of our country.
What was once mainly reserved for institutional investors and the wealthiest clients, I now want to make it accessible to all French people. In this I am following in the footsteps of my father who was a pioneer in allowing savers to invest in emerging countries, which was, in fact, revolutionary for the time and made it possible to build a franchise recognized today.
Does asset management cover an aspect of sovereignty?
Yes, in the sense that there is an ever-increasing dichotomy between the American market and the European market. Many European companies which should be listed in Europe, for the benefit of European savers, are migrating to the American stock markets. It started with Spotify in 2018, then the British ARM, or the German Linde which merged with an American company, or even more recently Birkenstock and Wise. This large-scale movement is virtuous for the American market but does not finance our real economy. At Carmignac, our responsibility is precisely to encourage savers to believe and invest in European companies. It is with this in mind that we recently recruited Frédéric Jeanmaire, a leading Franco-British manager, and are preparing the launch of a new fund dedicated to European equities.
Does this mean that investing in the American market yields more?
The American market is undoubtedly attractive and valuations are higher there. But we should be wary of a phenomenon of concentration: the Top 10 of the largest American companies constitute 38% of the market, while in Europe, the Top 10 only represents 20%. Without realizing it, a saver who chooses the American market passively with ETFs takes the risk of a very high concentration even though he thinks he is in a very diversified index.
Our job consists precisely of demonstrating to European savers that they would benefit from managing their money in an active and diversified manner in Europe, to avoid being subjected to the ups and downs of the American economy. We favor an active management approach rather than broad, passive market exposure. Over the past ten years, we have seen that the added value of active management is greater for investors in Europe than in the United States.
Would you nevertheless say that Europe is financially dominated by the United States?
On this subject, I am radically European and patriotic. Europe actually suffers from a problem of undervaluation of its companies. In this regard, I call on the European Commissioner for Financial Services, Maria Luis Albuquerque, to relax the constraints. Stop over-regulation, we need more fluidity to reverse this trend.
How does AI affect your business?
AI is a tool we use to benefit our customers. It allows us to be more efficient: recently, our assets increased from 27 to 44 billion at constant staff (280 employees). From an investment point of view, Carmignac first seeks to capture the best of the AI chain.
“I am radically European and patriotic”
To take an image: it is not necessarily the one who discovers a gold mine who will accumulate the most money, but rather the one who opens a shovel and ice ax store near the mine. Regardless of the value of gold, the development and mining market is sure to make money. We therefore seek to find nugget companies that benefit indirectly from the accelerations of AI. A company that provides air conditioning for electronic component factories in Korea or another that provides plumbing for data centers in Taiwan…
Aren’t there nevertheless risks linked to the development of AI?
Exceptional opportunity also means exceptional risks. The first is that of the destruction of work, therefore high unemployment with all that this can cause: social unrest, stress on the economic ecosystem, deterioration of mental health, etc. The second risk is that of misuse of AI. Someone with bad intentions, hitherto limited in their ability to act, can develop harmful activities thanks to AI. Finally, there is the risk of loss of control. The subject is widely debated among elites in the United States, but not enough in Europe. There is no whistleblower on the subject.
In the absence of a widely recognized framework for evaluating responsible AI from an investor perspective, Carmignac has developed its own analysis model to identify companies best prepared to manage AI-related opportunities and risks. My conviction is that it would be relevant for an IA Safety index to be put in place and taken into account in their rating.
