An interesting story about Carmignac. 20 billion of Carmignac’s funds have been issued in recent years. The management company’s founder, a lover of art and rock, says he has learned his lesson while designing his succession
Thursday, January the 23rd, 10:30 p.m. Mogador Theater in Paris. On stage, Edouard Carmignac wearing jeans and a T-shirt wiggles his hips and does backing vocals for Anna Kova. The young singer had been chosen to star in the private concert the firm throws yearly. A party for clients, employees, and the international press. One of Carmignac’s favorite traditions. L’enfant terrible of French finance has found his way to seduce everyone.
“I like to share my pleasures and hobbies with as many people as possible”
Before Kova, artists such as Neil Young, Rod Stewart, Eric Clapton, Simply Red, and the Rolling Stones had already fallen to his power (and his checkbook).
Five hours before the concert, Carmignac met with EL PAÍS, using in an impeccable navy blue tailored suit this time. His headquarters are not in La Défense, the financial district of Paris, but in Place Vendôme, the epicenter of the world’s luxury. He shares the neighborhood with Cartier, Dior, Channel, Van Cleef & Arpels, Damiani, and the Ritz Hotel.
“When I founded the management company, I thought that Place Vendôme could become something similar to Charlotte Square in Edinburgh, a space that has always seduced me. However, most of the financial firms that were here have either moved or disappeared. This concept of the finite explains why I like Mick Jagger’s song Time Waits For No One so much; this theme underlines the idea that nothing is eternal and that we must always look ahead ”.
Carmignac’s biography is always peppered with references to his beloved Stones. The headquarters of the company founded by this cosmopolitan in 1989 is a veritable museum. There are paintings, photographs, and sculptures in each corridor: From Richter to Warhol, passing through Barceló, Basquiat, or Lichtenstein. All the works are bought by himself and distributed among his homes, offices, and headquarters. He has some on the island of Porquerolles, (one of the most exclusive enclaves on the Côte d’Azur.)
The room chosen for the interview, in Tokyo, is decorated by a black and white photograph of Keith Richards signed by Peter Lindbergh. In the photo, the guitarist walks across the rooftops of New York wearing a very long coat and a cane.
“He is like a modern prince, the portrait conveys that he is the king of music”
He speaks slowly, almost in a whisper, in Spanish with a Latin American accent. Although he was born in Paris, he spent part of his childhood in Peru, where his father had trading businesses. He studied economics at the University of Paris and did an MBA at Columbia (USA). His career has always been linked to the financial world. Fame came to him with an economic crisis. His main fund, Carmignac Patrimoine, managed to avoid the stock market crash that began in 2007 with junk mortgages. He committed to emerging markets with an active and flexible management style.
He achieved profitability during six black years on the stock market, this was a great commercial success for the fund’s products. Under his management, assets went from € 13 billion in 2008 to € 56 billion in 2017. However, the winning streak has been cut short. The poor results of 2018 caused a stampede of clients. This continued to happen last year despite the fund’s efforts. In all, this biennium, 20 billion people no longer trusted the magic of Monsieur Carmignac.
“There are no excuses. We failed and it is normal for clients to penalize us. Many came to us thinking we were some kind of miracle management company because of our track record. However, the results of the funds in 2019 show that we were not a failure, that we were not cheating ”
In the final stretch of last year, the bleeding stopped. Now, “the money that comes out in some funds is recovered in others.” The contributions that arrive are for the most conservative products. Those that have a fixed income remain weak.
“With markets that have risen linearly in recent years, clients still do not appreciate our risk management proposal, a key feature for those who want to invest their savings thinking about retirement without worrying where to do it: the Stock Market or the bonds”
But Carmignac is confident:
“2020 will be our turning point. If adverse times are well managed, they become an opportunity to strengthen yourself. We will not fall in the next market crisis”
Carmignac is one of the richest people in France. It owns 70% of the management company and its fortune amounts to 1.3 billion, according to the latest updated data from Forbes. And he has for long been designing what the future will be like without him.
“This is a family business and a fund manager. Giving the baton to the second generation is complicated. The easiest, most obvious solution is to sell the firm. But that would be the worst service I could provide to clients and partners. There are very few fund managers that were bought by a third party and have survived.”
Everything revolves around his name: the management company, the funds, the museum, the foundation… And the continuity of the clan is now one of her concerns:
“In our industry, there are two key tasks: fund management and strategic, administrative, and commercial responsibility. Logically, Maxime [his daughter] should assume the direction of the second task and the first should fall to one of the key managers.”
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