In the world of asset management, performance may grab the headlines, but it’s the underlying firm culture, governance, and stability that often determine whether success is built to last.
This week, we are again comparing two asset managers rather than individual funds: Comgest and Carmignac Gestion, two well-known asset management firms with roots in France.
When analysts evaluate a fund, they assess and assign ratings to its People and Process pillars while the methodology for Morningstar Medalist Ratings also incorporates and assessment of the Parent pillar. This Parent pillar is our focus this week.
When determining an asset manager’s Parent pillar rating, Morningstar analysts evaluate several factors, including the firm’s ownership structure—assessing whether it prioritizes shareholder interests alone or also benefits fund investors—its financial strength and organizational stability, the presence of a strong investment culture and sense of stewardship as well as any regulatory concerns.
While both Comgest and Carmignac Gestion have strong elements, the challenges that Carmignac faces, result in a Parent Pillar rating of Average, positioning it one notch below the Above Average Parent pillar rating of Comgest.
Ability to attract and retain talent
At Carmignac, the firm’s ability to retain talent has been a mixed bag. The firm’s strong and stable fixed income team is a bright spot but elsewhere, such as in the equities team, turnover has been more meaningful. This phenomenon has led to average tenure of around six years in its broad investment team. While the firm still attracts seasoned professionals to backfill open positions, often with managers that have built a relevant track record at other firms, many of the more recent hires still need to settle in their current roles.
One noteworthy example of such a recent hire, is portfolio manager Kristofer Barrett, who boasts almost two decades of experience. Barrett took up the role as head of equities at Carmignac in August 2024 and manages the firm’s flagship global equity fund (Carmignac Investissement). With a fairly lean operation, high-conviction portfolios and a lead manager structure, there is elevated key-person risk here.
In contrast, specialist equity-manager Comgest’s investment team has been steady over time with annual investment team turnover typically at or below 5 percent. That being so, since 2021, the emerging-markets team has experience higher-than-normal turnover, but this has not spilled over to the broader investment team, which is comforting. Additionally, with no star managers at Comgest, key person risk is fairly mitigated while this format also seems to have contributed to a collegial and supportive investment culture.
At both firms, a part of investment staff bonuses is based on the performance of a representative basket of each firm’s strategies. While several investment periods are considered at Carmignac and Comgest, neither firm is implementing a formulaic calculation for the variable compensation.
For Comgest however, the 3 years results and beyond carry the most weight in the assessment, which aligns well with the long-term interests of investors.
A positive feature at both firms is the opportunity for staff to become firm owners through share schemes which helps retain expertise and align stakeholder interests over the long-term. At Carmignac, the result is that almost all portfolio managers are currently firm owners. At Comgest typically all investment team members with more than five years tenure are shareholders. Altogether, investment team members own around half of the firm, the rest is owned by non-investment staff, three founders, as well as the CEO and CIO.
Areas of excellence and growth
Comgest continues to focus on listed equities and maintains a “quality and growth” investment style. While the firm has had great success with most of its offerings, delivering strong risk-adjusted performance to investors, its emerging-markets franchise has not enjoyed the same success. Performance has been struggling since 2018, leading to team reshuffles and fund outflows. While the ship has not yet turned in the right direction, it remains a priority for the firm. We appreciate the firm’s long-term focus, commitment to its core competencies and robust investment philosophy that is consistently applied across the product range. At Comgest, asset gathering has never been front and centre.
While Carmignac’s euro fixed-income offerings have stood out over time, the same cannot be said of the firm’s equity strategies where performance has been a mixed bag. New strategy launches have remained within the firm’s expertise but with a thematic twist. For instance, the firm launched the global equity Carmignac Pf Human Xperience fund in 2021, focusing on companies that demonstrate a strong customer and employee satisfaction. Although these strategies are not outside the firm’s expertise, they are more niche. The firm has also ventured into private equity, partnering with external firm Clipway. It is still early days, however, as Carmignac only launched its first private equity strategy in 2024. That being so, traditional asset classes, still dominate the firm’s offerings.
Morningstar Medalist ratings
The graph compares the Morningstar Medalist Ratings of Carmignac Gestion and Comgest. This universe includes all funds and share classes with a Morningstar Medalist rating, (whether they are algorithmically driven or analyst-rated).
Elbie Louw, CFA, CIPM, is a senior analyst in manager research at Morningstar Benelux. Morningstar is a member of the Investment Officer expert panel.