Speaking to Citywire Selector, Ouahba, who is head of bonds at Carmignac, said there have been many times when it being overly cautious was successful and there would be no change to the fund’s mandate.
‘Overall the job of this fund is to take care of risk and it is a very important aspect of our job. In the last four years there were many situations where the risk was quite asymmetric.
'The downside risks were quite important and we have done what our client expects us to do which is to be prudent,’ Ouahba said.
'When we see danger for the client we do not hesitate in raising the tracking error to offset some of the risk. In the last four years we have had a lot of moments that were quite uneasy to travel through and we have always taken the cautious stance.’
As an example Ouahba highlighted was reducing duration in the fund, which is currently -0.6 years.
‘Last year we hedged the rate risk quite nicely and we were prepared for the fact that we would have some more inflation. As of June we started to reduce the modified duration, especially in the US.
'It was very slow to take place, as in July, August and September nothing really happened in the US rate market,’ Ouahba said.
‘When we had the huge sell off from October to December we were able to achieve positive returns on the bond side of the portfolio compared to negative return for the benchmark.
'We were negative in terms of duration on the rates side of the book and we had very high exposure to the dollar.'
Following the Brexit vote, the Patrimoine fund was not exposed to the British pound and equity positions were reduced.
Ouahba said the fund was only impacted by around 30 basis points and it is maintaining a cautious approach to the country.
‘We have hedged for a weak British pound,' she said. 'We have shorted the pound in the last few months and this has worked quite nicely for the fund.
'We think that the good momentum in the UK economy is fading quite rapidly. This will probably make it quite difficult for the Bank of England to raise rates as expected.'
Over three years to the end of July 2017 the Carmignac Patrimoine fund returned 12.43% in euro terms. This compares to a rise of 25.98% by its Citywire-assigned benchmark, the LCI MSCI AC World TR EUR/Citi WGBI TR EUR (50:50), over the same time frame.