Carmignac has trimmed exposure to larger technology companies and moved towards smaller players in its €28 billion ($30 billion) Carmignac Patrimoine fund.
Carmignac managing director Didier Saint-Georges told sister site Citywire Selector that Edouard Carmignac and Rose Ouahba, who manage the flagship fund, had taken profits on bigger names in the sector.
'Smaller tech names don't have such stretched valuations. Although we have kept large positions in Amazon, Tencent and Facebook, we have taken profits there and rebalanced that in favor of targeted, smaller players which have more potential from current levels,’ Saint-Georges said.
‘We have bought Chinese and US players such as those who directly or indirectly benefit from the growth in the AI space, such as supplies of software or data management.
'We have taken a position in the Chinese company called 58.com and a US company called Splunk which develops web application software for machine makers.'
Technology makes up 21.89% of the fund and is the largest sector in the equity portion of the fund. Social media firm Facebook makes up 1.87% of the fund and is the second largest equity holding.
As in the fixed income portion of the fund, Saint-Georges said the managers remained cautious in the equities space. He said tech combined strong earnings growth with safety.
'I hear analysts in our department still getting excited about certain stocks and stories and saying that this player can make money. It is an environment where the winner takes all and finding the winner can make a big difference,’ he said.
Away from technology, the managers have cut allocations to financials as part of their ongoing commitment to profit taking on cyclical stocks and moves towards high-visibility sectors.
'During the summer we had a pretty large position in European banks which we have reduced. We had 7% in European banks and we cut it to less than 2% today. We also had positions on Japanese financials, which we cut in more than half,’ Saint-Georges said.
'We do have some positions in emerging market financials but again here the trend has been to take profit. We still have a position in the US in the Bank of America. We are still there but we are not thinking of adding to this position, if anything we are trimming.’