Investment Objectives

The Fund aims to maximise the total level of return through investment, in a diversified portfolio of Emerging Market Corporate and Government fixed income securities as well as up to 15% of the Net Assets of the Sub-Fund in EM equities. In pursuing this objective, the Investment Manager shall invest primarily in a diversified portfolio of Emerging Market bonds rated at the time of investment “BBB+” to “CCC+” by S&P, or in bonds determined to be of comparable quality. The Fund can also invest up to 10% of its assets in Non-Rated bond issues and up to 30% of its assets in Non-Emerging Market issuers.

The Fund is actively managed, not managed by reference to any index.

Investor Profile

A typical investor in the Emerging Market Bond Fund would be one who is seeking to gain exposure to the Emerging Bond Market via corporate and/or sovereign bonds whilst seeking to accumulate wealth and save over time in a product that re-invests coupons received on a gross basis. Furthermore, investors in the Emerging Market Bond Fund are those with a medium to high tolerance to risk and who are planning to hold on to their investment for the medium-to-long term so as to benefit from the compound interest effect whilst also participating in the interest rate cycle as well as the investment cycle commensurate with an investment in Emerging Markets.

Fund Rules

The Investment Manager shall invest primarily but not solely in a diversified portfolio of Emerging Market Corporate fixed income securities and Emerging Market Government fixed income securities with maturities of 10 years or less, rated at the time of investment “Baa1” to “Caa1” by Moody’s or “BBB+” to “CCC+” by S&P, or in bonds determined to be of comparable quality by the Investment Manager. The Investment Manager may also invest up to 10% of the Net Assets of the Sub-Fund in unrated fixed income securities.

  • Minimum Credit Rating CCC+ (or equivalent)
  • Up to 10% in Non-Rated Bonds
  • Average Credit Quality of B- (or equivalent)
  • Emerging Market Issuers as per MSCI Emerging and Frontier
  • Up to 15% in Emerging Market Equities
  • Use of FDIs for hedging purposes only
  • No limit on exposure to CIS
  • Up to 30% in Non Emerging Market Issuers

Commentary

April 2024

Introduction

Following a promising end to 2023 and a continuation of positive performance into 2024, April delivered a reality check for emerging markets. This disappointment stemmed from a broad sell-off observed across global credit markets.

In the month, the narrative for credit markets underwent a dramatic shift.  Previously anticipating a dovish pivot from the Federal Reserve (Fed), investors were caught off guard by hotter-than-expected inflation data and a first quarter US GDP print that while weak on first-glance, showed resilient private demand. The former reignited concerns about persistent inflation and pushed back expectations for interest rate cuts. The consequence was a swift and significant rise in bond yields, particularly at the belly and longer-end of the maturity spectrum.

From a performance standpoint, emerging market corporate credit posted a loss (c. -0.54%), outperforming its developed market counterparts.

Market environment and performance

China’s macroeconomy continued to exhibit signs of a recovery in April. Leading indicators, notably the General Composite PMI (52.8 v a previous month reading of 52.7) pointed to the highest reading since May 2023, a sixth straight month of growth in private sector activity as manufacturing output and services activity expanded at quicker rates. Business confidence too proved positive, albeit weakening slightly from March’s reading. On the back of such upbeat figures, inflation figures, too proved upbeat. In April, consumer prices edged up 0.3% YoY in April 2024, compared with market forecasts and March’s figure of 0.1%, amid ongoing recovery in domestic demand despite a fragile economic revival

Indeed, while nascent signs of improvement are present, structural challenges demand continued monitoring and strategic policy interventions. Headwinds, notably the property sector’s decline continues unabated, and debt accumulation presents a persistent risk factor.

India’s economic performance exhibited continued expansion, most recent figures showed. The services sector, a crucial engine of the economy, remained robust, although growth slowed slightly compared to March. Meanwhile, manufacturing noted the second-fastest growth in the factory activity in over three years, as firms experienced a sharp upturn in new business intakes. Business sentiment too strengthened, bolstered by resilient demand conditions.

Latin America presented a nuanced economic picture in April, with a broader slowdown emerging compared to the earlier part of Q1. Brazil, the region’s powerhouse, exhibited continued resilience, with activity – aided by the manufacturing segment – revolving in expansionary territory. Inflation, meanwhile, eased for a sixth straight month to 3.93%. Mexico, albeit still in expansion, too witnessed a slowdown across its manufacturing segment amid a renewed fall in production volumes.

Fund performance

In April, the CC Emerging Market Bond Fund realized a loss of 2.02%. Throughout the month, the Manager largely maintained its portfolio allocation. Indeed, the decisions previously taken to increase the fund’s exposure to sovereigns and quasi-sovereigns, notably to Brazil and Mexico amongst other, remain valid and shall going forward pay dividends, particularly as the respective central bankers continue to gradually ease its yet restrictive macroeconomic policy.

Market and investment outlook

The upbeat momentum at the start of the year within emerging markets (EM) stalled in April as the narrative shifted towards a sustained period of higher interest rates. This hawkish turn overshadowed positive developments in China, where an improved economic scenario fueled optimism. China’s economic strength stemmed from better-than-expected inflation and activity data, which materialized following recent policy easing by the People’s Bank of China (PBOC).

Looking ahead, the evolving global interest rate environment, particularly decisions by the Fed, will be crucial to monitor. A hawkish Fed stance may lead to a sustained period of higher rates globally, potentially translating into a stronger US dollar. This “higher-for-longer” dollar scenario indeed presents a challenge for EM economies, notably; reduced fund flows from foreign investors seeking higher returns elsewhere, and increased refinancing costs for companies with large foreign currency debt burdens.

With respect to the Emerging Market Bond Fund, the manager will continue to assess the market landscape and capitalize on appealing credit opportunities. Consistent with recent actions, the manager will continue to tailor the portfolio to match prevailing yield conditions while increasing the portfolio’s overall duration. This whilst keeping a close eye on the political landscape within Emerging Markets and possible escalation of geopolitical tensions, which to-date have alas endured. Despite rate cut expectations falling, optimism for the year remains.

Key Facts & Performance

Fund Manager

Jordan Portelli

Jordan is CIO at CC Finance Group. He has extensive experience in research and portfolio management with various institutions. Today he is responsible of the group’s investment strategy and manages credit and multi-asset strategies.

PRICE (EUR)

ASSET CLASS

Bonds

MIN. INITIAL INVESTMENT

€2500

FUND TYPE

UCITS

BASE CURRENCY

EUR

5 year performance*

-18.27%

*View Performance History below
Inception Date: 03 Nov 2017
ISIN: MT7000021242
Bloomberg Ticker: CCEMBFC MV
Distribution Yield (%): N/A
Underlying Yield (%): 5.75
Distribution: N/A
Total Net Assets: $9.4 mn
Month end NAV in EUR: 76.78
Number of Holdings: 47
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.

Performance To Date (EUR)

Top 10 Holdings

iShares JPM USD EM Bond
7.1%
5.8% Oryx Funding Ltd 2031
4.2%
6.625% NBM US Holdings Inc 2029
4.2%
5.8% Turkcell 2028
4.0%
4.375% Freeport McMoran 2028
4.0%
4% HSBC Holdings plc perp
3.9%
4.75% Banco Santander SA perp
3.6%
5.60% Petrobras Global Fin 2031
3.0%
iShares JPM USD EM Corp Bond
2.9%
3.25% Export-Import BK India 2030
2.8%

Major Sector Breakdown*

Government
17.2%
Materials
10.2%
Financials
7.5%
Funds
7.1%
Consumer Staples
4.2%
Consumer Discretionary
4.4%
*excluding exposures to CIS

Maturity Buckets*

42.4%
0-5 Years
35.5%
5-10 Years
8.6%
10 Years+
*based on the Next Call Date

Credit Ratings

Average Credit Rating: BB-

Risk & Reward Profile

1
2
3
4
5
6
7
Lower Risk

Potentialy Lower Reward

Higher Risk

Potentialy Higher Reward

Top Holdings by Country*

United States
15.4%
Brazil
14.2%
Mexico
11.0%
India
6.4%
Oman
6.3%
Turkey
5.9%
United Kingdom
3.9%
Spain
3.6%
Indonesia
3.6%
Malta (incl. cash)
3.4%
*including exposures to CIS

Asset Allocation

Cash 3.4%
Bonds (incl. ETFs) 96.6%

Performance History (EUR)*

1 Year

0.73%

3 Year

-16.46%

5 Year

-18.27%

* The EUR Accumulator Share Class (Class C) was launched on 03 November 2017.
** Returns quoted net of TER. Entry and exit charges may reduce returns for investors.
*** The Annualised rate is an indication of the average growth of the Fund over one year. The value of the investment and the income yield derived from the investment, if any, may go down as well as up and past performance is not necessarily indicative of future performance, nor a reliable guide to future performance. Hence returns may not be achieved and you may lose all or part of your investment in the Fund. Currency fluctuations may affect the value of investments and any derived income.

Currency Allocation

USD 97.5%
Euro 2.5%
Data for risk statistics is not available for this fund.

Interested in this product?

  • Investment Objectives

    The Fund aims to maximise the total level of return through investment, in a diversified portfolio of Emerging Market Corporate and Government fixed income securities as well as up to 15% of the Net Assets of the Sub-Fund in EM equities. In pursuing this objective, the Investment Manager shall invest primarily in a diversified portfolio of Emerging Market bonds rated at the time of investment “BBB+” to “CCC+” by S&P, or in bonds determined to be of comparable quality. The Fund can also invest up to 10% of its assets in Non-Rated bond issues and up to 30% of its assets in Non-Emerging Market issuers.

    The Fund is actively managed, not managed by reference to any index.

  • Investor profile

    A typical investor in the Emerging Market Bond Fund would be one who is seeking to gain exposure to the Emerging Bond Market via corporate and/or sovereign bonds whilst seeking to accumulate wealth and save over time in a product that re-invests coupons received on a gross basis. Furthermore, investors in the Emerging Market Bond Fund are those with a medium to high tolerance to risk and who are planning to hold on to their investment for the medium-to-long term so as to benefit from the compound interest effect whilst also participating in the interest rate cycle as well as the investment cycle commensurate with an investment in Emerging Markets.

    Investor Profile Icon
  • Fund Rules

    The Investment Manager of the CC High Income Bond Funds – EUR and USD has the duty to ensure that the underlying investments of the funds are well diversified. According to the prospectus, the investment manager has to abide by a number of investment restrictions to safeguard the value of the assets

    • Minimum Credit Rating CCC+ (or equivalent)
    • Up to 10% in Non-Rated Bonds
    • Average Credit Quality of B- (or equivalent)
    • Emerging Market Issuers as per MSCI Emerging and Frontier
    • Up to 15% in Emerging Market Equities
    • Use of FDIs for hedging purposes only
    • No limit on exposure to CIS
    • Up to 30% in Non Emerging Market Issuers
  • Commentary

    April 2024

    Introduction

    Following a promising end to 2023 and a continuation of positive performance into 2024, April delivered a reality check for emerging markets. This disappointment stemmed from a broad sell-off observed across global credit markets.

    In the month, the narrative for credit markets underwent a dramatic shift.  Previously anticipating a dovish pivot from the Federal Reserve (Fed), investors were caught off guard by hotter-than-expected inflation data and a first quarter US GDP print that while weak on first-glance, showed resilient private demand. The former reignited concerns about persistent inflation and pushed back expectations for interest rate cuts. The consequence was a swift and significant rise in bond yields, particularly at the belly and longer-end of the maturity spectrum.

    From a performance standpoint, emerging market corporate credit posted a loss (c. -0.54%), outperforming its developed market counterparts.

    Market environment and performance

    China’s macroeconomy continued to exhibit signs of a recovery in April. Leading indicators, notably the General Composite PMI (52.8 v a previous month reading of 52.7) pointed to the highest reading since May 2023, a sixth straight month of growth in private sector activity as manufacturing output and services activity expanded at quicker rates. Business confidence too proved positive, albeit weakening slightly from March’s reading. On the back of such upbeat figures, inflation figures, too proved upbeat. In April, consumer prices edged up 0.3% YoY in April 2024, compared with market forecasts and March’s figure of 0.1%, amid ongoing recovery in domestic demand despite a fragile economic revival

    Indeed, while nascent signs of improvement are present, structural challenges demand continued monitoring and strategic policy interventions. Headwinds, notably the property sector’s decline continues unabated, and debt accumulation presents a persistent risk factor.

    India’s economic performance exhibited continued expansion, most recent figures showed. The services sector, a crucial engine of the economy, remained robust, although growth slowed slightly compared to March. Meanwhile, manufacturing noted the second-fastest growth in the factory activity in over three years, as firms experienced a sharp upturn in new business intakes. Business sentiment too strengthened, bolstered by resilient demand conditions.

    Latin America presented a nuanced economic picture in April, with a broader slowdown emerging compared to the earlier part of Q1. Brazil, the region’s powerhouse, exhibited continued resilience, with activity – aided by the manufacturing segment – revolving in expansionary territory. Inflation, meanwhile, eased for a sixth straight month to 3.93%. Mexico, albeit still in expansion, too witnessed a slowdown across its manufacturing segment amid a renewed fall in production volumes.

    Fund performance

    In April, the CC Emerging Market Bond Fund realized a loss of 2.02%. Throughout the month, the Manager largely maintained its portfolio allocation. Indeed, the decisions previously taken to increase the fund’s exposure to sovereigns and quasi-sovereigns, notably to Brazil and Mexico amongst other, remain valid and shall going forward pay dividends, particularly as the respective central bankers continue to gradually ease its yet restrictive macroeconomic policy.

    Market and investment outlook

    The upbeat momentum at the start of the year within emerging markets (EM) stalled in April as the narrative shifted towards a sustained period of higher interest rates. This hawkish turn overshadowed positive developments in China, where an improved economic scenario fueled optimism. China’s economic strength stemmed from better-than-expected inflation and activity data, which materialized following recent policy easing by the People’s Bank of China (PBOC).

    Looking ahead, the evolving global interest rate environment, particularly decisions by the Fed, will be crucial to monitor. A hawkish Fed stance may lead to a sustained period of higher rates globally, potentially translating into a stronger US dollar. This “higher-for-longer” dollar scenario indeed presents a challenge for EM economies, notably; reduced fund flows from foreign investors seeking higher returns elsewhere, and increased refinancing costs for companies with large foreign currency debt burdens.

    With respect to the Emerging Market Bond Fund, the manager will continue to assess the market landscape and capitalize on appealing credit opportunities. Consistent with recent actions, the manager will continue to tailor the portfolio to match prevailing yield conditions while increasing the portfolio’s overall duration. This whilst keeping a close eye on the political landscape within Emerging Markets and possible escalation of geopolitical tensions, which to-date have alas endured. Despite rate cut expectations falling, optimism for the year remains.

  • Key facts & performance

    Fund Manager

    Jordan Portelli

    Jordan is CIO at CC Finance Group. He has extensive experience in research and portfolio management with various institutions. Today he is responsible of the group’s investment strategy and manages credit and multi-asset strategies.

    PRICE (EUR)

    ASSET CLASS

    Bonds

    MIN. INITIAL INVESTMENT

    €2500

    FUND TYPE

    UCITS

    BASE CURRENCY

    EUR

    5 year performance*

    -18.27%

    *View Performance History below
    Inception Date: 03 Nov 2017
    ISIN: MT7000021242
    Bloomberg Ticker: CCEMBFC MV
    Distribution Yield (%): N/A
    Underlying Yield (%): 5.75
    Distribution: N/A
    Total Net Assets: $9.4 mn
    Month end NAV in EUR: 76.78
    Number of Holdings: 47
    Auditors: Deloitte Malta
    Legal Advisor: Ganado Advocates
    Custodian: Sparkasse Bank Malta p.l.c.

    Performance To Date (EUR)

    Risk & Reward Profile

    1
    2
    3
    4
    5
    6
    7
    Lower Risk

    Potentialy Lower Reward

    Higher Risk

    Potentialy Higher Reward

    Top 10 Holdings

    iShares JPM USD EM Bond
    7.1%
    5.8% Oryx Funding Ltd 2031
    4.2%
    6.625% NBM US Holdings Inc 2029
    4.2%
    5.8% Turkcell 2028
    4.0%
    4.375% Freeport McMoran 2028
    4.0%
    4% HSBC Holdings plc perp
    3.9%
    4.75% Banco Santander SA perp
    3.6%
    5.60% Petrobras Global Fin 2031
    3.0%
    iShares JPM USD EM Corp Bond
    2.9%
    3.25% Export-Import BK India 2030
    2.8%

    Top Holdings by Country*

    United States
    15.4%
    Brazil
    14.2%
    Mexico
    11.0%
    India
    6.4%
    Oman
    6.3%
    Turkey
    5.9%
    United Kingdom
    3.9%
    Spain
    3.6%
    Indonesia
    3.6%
    Malta (incl. cash)
    3.4%
    *including exposures to CIS

    Major Sector Breakdown*

    Government
    17.2%
    Materials
    10.2%
    Financials
    7.5%
    Funds
    7.1%
    Consumer Staples
    4.2%
    Consumer Discretionary
    4.4%
    *excluding exposures to CIS

    Asset Allocation

    Cash 3.4%
    Bonds (incl. ETFs) 96.6%

    Maturity Buckets*

    42.4%
    0-5 Years
    35.5%
    5-10 Years
    8.6%
    10 Years+
    *based on the Next Call Date

    Performance History (EUR)*

    1 Year

    0.73%

    3 Year

    -16.46%

    5 Year

    -18.27%

    * The EUR Accumulator Share Class (Class C) was launched on 03 November 2017.
    ** Returns quoted net of TER. Entry and exit charges may reduce returns for investors.
    *** The Annualised rate is an indication of the average growth of the Fund over one year. The value of the investment and the income yield derived from the investment, if any, may go down as well as up and past performance is not necessarily indicative of future performance, nor a reliable guide to future performance. Hence returns may not be achieved and you may lose all or part of your investment in the Fund. Currency fluctuations may affect the value of investments and any derived income.

    Credit Ratings

    Average Credit Rating: BB-

    Currency Allocation

    USD 97.5%
    Euro 2.5%
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