MM Meets Maxime Carmignac: ‘You don’t inherit a family business from your parents; you borrow it from your children’

It is a couple of days since the late Queen’s state funeral and the heavy security fencing around Carlton House Terrace remains in place. It jars with the magnificent interior of Carmignac’s UK office, where I meet managing director Maxime Carmignac.

She is the daughter of Édouard Carmignac, who founded the French asset manager in the late 1980s. It is a dynasty of sorts and over the course of the meeting I cannot help but make a connection between Maxime and the late Queen Elizabeth II.

Up to 80% of women are not happy with the way they are addressed by the financial community

Both female leaders had to carve a career from within their father’s shadow, to varying degrees. And a child’s relationship with a parent who is both high achieving and a public figure is fascinating.

A striking fact about Carmignac’s introduction to the finance world is that it did not come from her father.

“My father was so busy at work that, when he was at home, he was not very willing to talk about finance,” she says.

“He was more into things like the arts, sports and other hobbies.

“Therefore I don’t feel I had a very special focus on finance as a child. What’s interesting is the thing I had love for was competition.”

We feel the UK is ahead in terms of regulation and online penetration for finance

This love of competition revealed itself through showjumping at weekends. But Carmignac attended a very demanding school and eventually had to sell her pony.

“Riding is a fantastic sport for a child because you must always be with your horse. It teaches you teamwork and resilience very early in your life. But I felt that you can be a privileged child and get offered a very good horse. So it is not a very meritocratic sport.”

Drive and resilience

Missing the competition she had derived from horse riding, at the age of 19 Carmignac started to run marathons. She points out that the sport is more accessible than horse riding because most people can afford running shoes, they stand on the same starting line and the finish is all about drive and resilience.

Her career journey can be likened to a marathon; one that has taken her to firms and cities across the world.

You don’t inherit a family business from your parents; you borrow it from your children

Where did Carmignac’s passion for finance start?

“I had a breakthrough at school. I was at my business school, named ESSEC, where I took the investment banking course. I didn’t pick it, but it was something I had to do.

“Then an investment banker from JP Morgan told us about the Carrefour Market hostile takeover. I fell in love with finance as I was fascinated by the strategic aspect, analytics and the numbers. And I decided, ‘This is what I want to do.’”

Carmignac first came to the UK in 2001 as an investment banking intern at Morgan Stanley. Then she got a full-time position at Lazard. Through these experiences she developed a passion for corporate finance as opposed to market finance.

“Corporate finance is crucial to my personality because I like long-term [investment] and I love analytics. So, for me, you work very hard, you do your financial modelling and you can improve your level of confidence with your analysis. By contrast, financial markets are very unsettling and work across time zones.”

What is best for my clients, which will, over time, benefit my company and my employees?

At this point her father began to apply subtle pressure for her to join the family business. However, after two years of investment banking she wanted to understand more about businesses themselves.

“I wanted to go into consulting and I was very lucky to work for McKinsey,” she says. “I did two years of consulting. With two years’ investment banking and two years of consulting experience, I then felt ready to join Carmignac.

“I was 26 but, after another two years, I realised I lacked the maturity to be at Carmignac because it was a family business.

“I had seen this opportunity too much as a duty and joined because my father wanted me to.”

Carmignac left for New York to work in a hedge fund for yet another two years. She is “very grateful” for this time because it provided international experience. It also gave her the maturity she needed to work at her father’s firm while instilling a different mindset. Now she regarded Carmignac as an opportunity rather than a duty.

Women are more interested in the ‘Why?’ of investment, while men are more interested in the ‘How?’

“When I started my career at Carmignac I was in fund management. Very soon I realised I could add more value for the long term by coming back to start my own project on the corporate side of finance. I could hire top fund managers and split the roles in order to diversify risk.”

Responsible investing

The breadth of Carmignac’s financial experience feeds in to other big interests such as responsible investment. She believes environmental, social and governance (ESG) issues require an attitude both serious and humble.

“We have to be very humble because we are at the early stage of regulation that is changing all the time. What is key is to be transparent with criteria and processes so that we can empower our clients to allocate capital based on their own ethical stance.”

In 40 years’ time, 70% of wealth in the US will be in the hands of women because they outlive men

Carmignac respects the two dominant approaches to ESG investing: best in class and trajectory.

Best-in-class investing involves finding the firms that are leaders in their sector in terms of ESG criteria. An example she gives is people who invest in Danish energy giant Ørsted — a leader in offshore wind.

Trajectory investing allows people to invest in, for example, German utility company RWE, which is a huge polluter today but is working to bring down emissions.

Both approaches have merits but people can get lost in ideological debates. For Carmignac, the emotive nature of the discussion can be counter-productive.

“This area is indeed moralistic and what is worse is that morality is changing all the time. We are told, ‘You cannot own oil and gas stocks.’ And then, when you look, oil and gas firms are actually the largest investors in renewables.

We have to be very humble with ESG because we are at the early stage of regulation that is changing all the time

“If you take the top-five companies in Europe (in terms of incremental capacity and renewable capacity) from today to 2030, in the top five you have oil and gas companies including ENEL, Total, Iberdrola, BP and Ørsted.”

The problem, according to Carmignac, is that a narrative has developed in which fossil fuels, nuclear power and defence stocks are bad. But some real-world problems, such as the energy crisis and the war in Ukraine, show societies still need these things, in the short term at least.

Women investors

Another topic close to her heart is the empowerment of women investors. She feels this is where the largest inequality lies, which is absurd given women make up about 50% of the population.

“There is a very serious study from EY that says, in 40 years’ time, 70% of wealth in the US will be in the hands of women because they outlive men,” she says.

She observes there is also higher female participation in the workforce and the gender pay gap is going in the right direction.

So, for all those structural reasons, we can expect more money in the hands of women.

And yet females are badly served by the financial community.

“Between 60% and 80% of women are not happy with the way they are addressed by the financial community,” Carmignac adds.

“Women have different aspirations from men, according to surveys from private banks and retail banks. Women focus on sustainability and are more risk adverse.

I could hire top fund managers and split the roles in order to diversify risk

“Finally, women are more interested in the ‘Why?’ of investment, while men are more interested in the ‘How?’. Women don’t invest early in their life and therefore don’t benefit from compound interest. They also need more transparent and simple financial products due to a lack of trust [in financial services].”

Three years ago, she actually created an equity product for women, aimed at the long term with global exposure. She has put her own savings there because she wants a product that compounds them for the future.

Aside from creating her own products, Carmignac has other achievements to her name. When she started in the UK in 2013, the business had four employees; it now has 60. Half of the investment team sits in the UK and she is bullish about the country’s future. One reason is that the UK has a more advanced financial services market than that of the rest of Europe.

I realised I lacked the maturity to be at Carmignac because it was a family business

“We feel the UK is ahead in terms of regulation and online penetration for finance. You have the big success of AJ Bell and Hargreaves Lansdown, which have a huge market share. In the UK, online direct-to-customer amounts to 15% of distribution; in Europe it is at best 5%.”

Long view

For Carmignac the overarching theme for running a business or investment is the long term. She observes being in a family-run firm enables her to take the long view.

“The time horizon is very special. It makes me think of a quote from Antoine de Saint-Exupéry, author of The Little Prince, who says: ‘You don’t inherit the planet from your parents; you borrow it from your children.’ I think that’s a beautiful way to think, and you can translate that to a family business.

“You don’t inherit a family business from your parents; you borrow it from your children.

I was fascinated by the strategic aspect, analytics and the numbers. And I decided, ‘This is what I want to do’

“If you project yourself over the very long term, it enables you to be wiser and gives you the luxury of time. Then it doesn’t become about ego; it becomes, ‘What is best for my clients, which will, over time, benefit my company and my employees?’”

Away from finance, Carmignac is looking forward to her next marathon and breaking her record of three hours 41 minutes.

“I want to go below three hours 30 minutes. This is my objective.”

Ever the competitor.

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This article featured in the January 2023 edition of MM. If you would like to subscribe to the monthly magazine, please click here.