Carmignac revamps sub-fund range in light of ESG regulation update

Carmignac has made a number of changes to its sub-funds in response to new European regulatory guidance regarding ESG funds.

The amendments include three funds being reclassified as Article 8 funds rather than Article 9, and several others receiving new sustainability objectives. 

The changes were posted to the fund house's website on 30 December and took effect on 1 January.

Carmignac said in light of updated regulatory guidance, specifically the European Commission's Q&A, which provides further clarity on what is expected of an Article 9 fund, three of its sub-funds would be reclassified as Article 8.

These are: Carmignac Portfolio Family Governed; Carmignac Portfolio Investissement; and Carmignac Portfolio EM Debt.

Carmignac said: "While there is no precise threshold in the regulation, we consider that it is commonly accepted across the industry since publication of the European Commission's Q&A that investments shall be made only in sustainable investments for Article 9 funds".

Sustainability Objectives

The company has also increased the minimum proportion of sustainable investment required by six of its funds and four of its funds have increased carbon emission targets.

Carmignac Portfolio Climate Transition will increase its minimum sustainable investment from 60% to 80%. For this fund, a company qualifies as sustainable if its activities contribute wholly or partly to climate change mitigation and adaption, in accordance with the EU Taxonomy standards regulation, or are involved in the more efficient extraction of commodities.

Portfolio Emergents, Portfolio Grande Europe and Portfolio Grandchildren will all also increase to 80% from 50%. For these funds, a company qualifies if more than 50% of its revenue comes from goods and services related to sustainable activities, or invest at least 50% of its capital expenditure in business activities that are aligned with one of nine selected UN Sustainable Development Goals.

Carmignac Portfolio Sécurité and Carmignac Portfolio EM debt will also both establish a 10% minimum share of sustainable investments.

Along with these changes, four funds will increase their carbon emission reduction target from 30% lower than their market average, to 50% lower.

These funds are: Portfolio Emergents; Portfolio Family Governed; Portfolio Grandchildren; and Portfolio Grande Europe.