The era of ‘easy money’ is over, warns Carmignac boss
Star stockpicker Edouard Carmignac has urged investors to stop buying into passive funds as rising interest rates signal the end of ‘easy money’. The veteran fund manager, who co-founded asset management house Carmignac in 1989, warned investors that staying in passive funds risks exposure to struggling, debt-heavy companies. Rising interest rates force passive funds, which [...]
The era of 'easy money' is coming to an end, warns Edouard Carmignac, co-founder of asset management firm Carmignac. Rising interest rates signal the need for investors to move away from passive funds and towards active investing, which allows for a more selective approach to choosing companies with strong growth potential. Passive funds, which track market benchmarks, are now holding on to debt-heavy, unprofitable companies that struggle with expensive debt.
Carmignac emphasizes the importance of active management, stating that "easy money is a powerful anaesthetic... When money becomes expensive again, choosing becomes essential." He warns investors to be cautious when selecting companies to invest in, as mediocre companies may no longer be able to survive with higher borrowing costs.
Carmignac's firm has a £33.7 billion portfolio and has previously invested in successful companies like Mistral, SpaceX, and Revolut.
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