Investment Objectives

The Sub-Fund aims to maximise the total level of return through investment, in a diversified portfolio of Emerging Market (“EM”) 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 EM 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-EM issuers.

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

Investor Profile

A typical investor in the CC 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 CC 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 at a Glance

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

May 2022

Introduction
Market concerns, notably; lingering key macro-economic risks stemming from the war in Ukraine, monetary policy tightening as central banks continue to grapple with inflation, and a zero-tolerance coronavirus policy leading to stringent restrictions in China – threatening demand and sustaining supply-chain related disruptions, have in May continued to pose as a block to a shift in sentiment. A risk-off mode somewhat persisted, with credit market performance proving somewhat mixed.

U.S. corporate credit edged higher as treasury yields reversed some of the recent upward moves witnessed at the long-end of the curve, following a slight shift in the Fed’s tone, now seemingly more cautious as risks to growth increased. European credit remained in the red, furthering on the recent month’s negative performance.

Market environment and performance
From the data front in the emerging market world, China’s manufacturing sector, for a third successive month and fourth since the start of the year, revolved in contractionary territory as coronavirus outbreaks and zero-tolerance policies took a toll on the economy. In figures, manufacturing PMI rose to 49.1 from 46.0 in April, beating market expectations of 48.0. Both output and new orders fell at a softer rate amid further declines in both export orders and employment. Meanwhile, backlogs of work increased further, amid ongoing disruptions. Consequent to stricter containment measures services fell deeply into contractionary territory. China’s services PMI increased to 41.4 from 36.2 in April, the third straight month of contraction amid coronavirus lockdown measures. New orders declined at a softer pace while employment fell modestly, with the rate of job cuts at the fastest rate in 15 months.

In Brazil, private sector business activity has in May continued to witness a recovery amid a remarkable improvement in manufacturing and services maintaining its recent momentum. Manufacturing PMI, aided by stronger growth in both production and new orders, jumped to a 54.2 in May, the third successive month of expansion in factory activity. Meanwhile, services PMI eased to 58.6 from 60.6 in the previous month underpinned by higher inflows of new business amid strong underlying demand and new client wins, leading to increased hiring activity.

Price pressures in EM markets persisted. In India, annual inflation rate remained largely elevated at 7.04 per cent in May of 2022. Also, Brazil’s annual inflation rate eased to 11.73 per cent from April’s 12.13 per cent, the ninth consecutive month of double-digit inflation.  

In May EM high yield corporate credit extended on the downward trajectory witnessed in the previous months. During the period under review, the EM high yield names recorded a loss of 1.31 per cent.

Fund performance
In the month of May, the CC Emerging Market Bond Fund registered a loss of 1.40 per cent, in line with the spread widening witnessed in emerging high yield corporate credit. Throughout the month the Manager continued to seek pockets of value by looking into attractive credit stories while maintaining a low portfolio duration, this to reduce the funds sensitivity to changes in interest rates. During the month the fund reduced its exposure to issues having a high duration, namely notes issued by the Republic of Paraguay and NBM Holdings. Conversely, the Manager deployed cash in two EM ETFs, targeting exposure in both EM sovereign and corporate names.

Market and investment outlook
Consequent to political uncertainty in important regions, Russia-Ukraine tensions seemingly far from abating, and uncertainty in China surrounding the coronavirus pandemic and stringent curbs imposed, mitigating demand and giving rise to supply issues, EMs may in 2022 possibly continue to witness some volatility. That said, the Manager will continue to assess the emerging market space scenario even on the basis of further monetary policy actions taken by Central Banks, which seem to follow the Fed’s stance.

In terms of bond picking, the Manager will continue to monitor the current unprecedented environment and take opportunities in attractive credit stories which should continue to add value to the portfolio. The recent widening in corporate credit spreads may indeed pose an opportunity, presenting attractive entry points yielding capital appreciation. 

A quick introduction to our Malta Government Bond Fund.

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Key Facts & Performance

Fund Manager

Jordan Portelli

Jordan is an Investment Manager at Calamatta Cuschieri and is the Head of the Fixed Income desk. Jordan has over 10 years’ experience in High Yield debt. He is a member on a number of Investment Committees and is also a member on the House View Committee of Calamatta Cuschieri. He obtained a Diploma in Business and Management from Cambridge College in the U.K. He also obtained his BSc (Hons) in Economics from the London School of Economics.

PRICE (USD)

$

ASSET CLASS

Bonds

MIN. INITIAL INVESTMENT

$3000

FUND TYPE

UCITS

BASE CURRENCY

USD

RETURN (SINCE INCEPTION)*

-12.36%

*View Performance History below
Inception Date: 02 Nov 2017
ISIN: MT7000021234
Bloomberg Ticker: CCEMBFB MV
Entry Charge: Up to 2.5%
Total Expense Ratio: 1.78%
Exit Charge: None
Distribution Yield (%): 3.850
Underlying Yield (%): 4.94
Distribution: 31/03 and 30/09
Total Net Assets: $10.90 mn
Month end NAV in USD: 73.32
Number of Holdings: 45
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
% of Top 10 Holdings: 33.5

Performance To Date (USD)

Top 10 Holdings

iShares JPM USD EM Bond Fund
3.8%
iShares JPM USD EM Corp Bond
3.7%
5.8% Oryx Funding ltd 2031
3.6%
4.375% Freeport-McMoran Inc 2028
3.6%
5.45% Cemex SAB DE CV 2029
3.5%
4% HSBC Holdings plc perp
3.3%
4.75% Banco Santander SA perp
3.2%
5.8% Turkcell 2028
3.1%
5.299% Petrobras Global Fin 2025
2.9%
6.625% NBM US Holdings Inc 2029
2.9%

Major Sector Breakdown*

Asset 7
Communications
9.6%
Materials
8.8%
Industrials
6.5%
Materials
5.8%
ETFs
5.7%
Real Estate
5.2%
*excluding exposures to CIS

Maturity Buckets*

35.0%
0-5 Years
32.1%
5-10 Years
7.6%
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*

Malta (incl. Cash)
25.3%
Brazil
10.8%
Mexico
9.5%
United States
8.9%
India
8.2%
China
7.3%
Oman
5.5%
Turkey
4.9%
Indonesia
3.7%
Great Britain
3.3%
*including exposures to CIS

Asset Allocation

Cash 15.9%
Bonds (incl. ETFs) 84.1%

Performance History (EUR)*

YTD

-14.82%

2021

0.24%

2020

-0.70%

2019

10.40%

2018

-6.16%

Annualised Since Inception****

-2.84%

* The USD Distributor Share Class (Class B) was launched on 03 November 2017.
** Performance figures are calculated using the Value Added Monthly Index "VAMI" principle. The VAMI calculates the total return gained by an investor from reinvestment of any dividends and additional interest gained through compounding.
*** 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 96.5%
Euro 3.5%
Data for risk statistics is not available for this fund.

Interested in this product?

  • Investment Objectives

    The Sub-Fund aims to maximise the total level of return through investment, in a diversified portfolio of Emerging Market (“EM”) 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 EM 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-EM issuers.

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

  • Investor profile

    A typical investor in the CC 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 CC 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

    May 2022

    Introduction
    Market concerns, notably; lingering key macro-economic risks stemming from the war in Ukraine, monetary policy tightening as central banks continue to grapple with inflation, and a zero-tolerance coronavirus policy leading to stringent restrictions in China – threatening demand and sustaining supply-chain related disruptions, have in May continued to pose as a block to a shift in sentiment. A risk-off mode somewhat persisted, with credit market performance proving somewhat mixed.

    U.S. corporate credit edged higher as treasury yields reversed some of the recent upward moves witnessed at the long-end of the curve, following a slight shift in the Fed’s tone, now seemingly more cautious as risks to growth increased. European credit remained in the red, furthering on the recent month’s negative performance.

    Market environment and performance
    From the data front in the emerging market world, China’s manufacturing sector, for a third successive month and fourth since the start of the year, revolved in contractionary territory as coronavirus outbreaks and zero-tolerance policies took a toll on the economy. In figures, manufacturing PMI rose to 49.1 from 46.0 in April, beating market expectations of 48.0. Both output and new orders fell at a softer rate amid further declines in both export orders and employment. Meanwhile, backlogs of work increased further, amid ongoing disruptions. Consequent to stricter containment measures services fell deeply into contractionary territory. China’s services PMI increased to 41.4 from 36.2 in April, the third straight month of contraction amid coronavirus lockdown measures. New orders declined at a softer pace while employment fell modestly, with the rate of job cuts at the fastest rate in 15 months.

    In Brazil, private sector business activity has in May continued to witness a recovery amid a remarkable improvement in manufacturing and services maintaining its recent momentum. Manufacturing PMI, aided by stronger growth in both production and new orders, jumped to a 54.2 in May, the third successive month of expansion in factory activity. Meanwhile, services PMI eased to 58.6 from 60.6 in the previous month underpinned by higher inflows of new business amid strong underlying demand and new client wins, leading to increased hiring activity.

    Price pressures in EM markets persisted. In India, annual inflation rate remained largely elevated at 7.04 per cent in May of 2022. Also, Brazil’s annual inflation rate eased to 11.73 per cent from April’s 12.13 per cent, the ninth consecutive month of double-digit inflation.  

    In May EM high yield corporate credit extended on the downward trajectory witnessed in the previous months. During the period under review, the EM high yield names recorded a loss of 1.31 per cent.

    Fund performance
    In the month of May, the CC Emerging Market Bond Fund registered a loss of 1.40 per cent, in line with the spread widening witnessed in emerging high yield corporate credit. Throughout the month the Manager continued to seek pockets of value by looking into attractive credit stories while maintaining a low portfolio duration, this to reduce the funds sensitivity to changes in interest rates. During the month the fund reduced its exposure to issues having a high duration, namely notes issued by the Republic of Paraguay and NBM Holdings. Conversely, the Manager deployed cash in two EM ETFs, targeting exposure in both EM sovereign and corporate names.

    Market and investment outlook
    Consequent to political uncertainty in important regions, Russia-Ukraine tensions seemingly far from abating, and uncertainty in China surrounding the coronavirus pandemic and stringent curbs imposed, mitigating demand and giving rise to supply issues, EMs may in 2022 possibly continue to witness some volatility. That said, the Manager will continue to assess the emerging market space scenario even on the basis of further monetary policy actions taken by Central Banks, which seem to follow the Fed’s stance.

    In terms of bond picking, the Manager will continue to monitor the current unprecedented environment and take opportunities in attractive credit stories which should continue to add value to the portfolio. The recent widening in corporate credit spreads may indeed pose an opportunity, presenting attractive entry points yielding capital appreciation. 

  • Key facts & performance

    Fund Manager

    Jordan Portelli

    Jordan is an Investment Manager at Calamatta Cuschieri and is the Head of the Fixed Income desk. Jordan has over 10 years’ experience in High Yield debt. He is a member on a number of Investment Committees and is also a member on the House View Committee of Calamatta Cuschieri. He obtained a Diploma in Business and Management from Cambridge College in the U.K. He also obtained his BSc (Hons) in Economics from the London School of Economics.

    PRICE (USD)

    $

    ASSET CLASS

    Bonds

    MIN. INITIAL INVESTMENT

    $3000

    FUND TYPE

    UCITS

    BASE CURRENCY

    USD

    RETURN (SINCE INCEPTION)*

    -12.36%

    *View Performance History below
    Inception Date: 02 Nov 2017
    ISIN: MT7000021234
    Bloomberg Ticker: CCEMBFB MV
    Entry Charge: Up to 2.5%
    Total Expense Ratio: 1.78%
    Exit Charge: None
    Distribution Yield (%): 3.850
    Underlying Yield (%): 4.94
    Distribution: 31/03 and 30/09
    Total Net Assets: $10.90 mn
    Month end NAV in USD: 73.32
    Number of Holdings: 45
    Auditors: Deloitte Malta
    Legal Advisor: Ganado Advocates
    Custodian: Sparkasse Bank Malta p.l.c.
    % of Top 10 Holdings: 33.5

    Performance To Date (USD)

    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 Fund
    3.8%
    iShares JPM USD EM Corp Bond
    3.7%
    5.8% Oryx Funding ltd 2031
    3.6%
    4.375% Freeport-McMoran Inc 2028
    3.6%
    5.45% Cemex SAB DE CV 2029
    3.5%
    4% HSBC Holdings plc perp
    3.3%
    4.75% Banco Santander SA perp
    3.2%
    5.8% Turkcell 2028
    3.1%
    5.299% Petrobras Global Fin 2025
    2.9%
    6.625% NBM US Holdings Inc 2029
    2.9%

    Top Holdings by Country*

    Malta (incl. Cash)
    25.3%
    Brazil
    10.8%
    Mexico
    9.5%
    United States
    8.9%
    India
    8.2%
    China
    7.3%
    Oman
    5.5%
    Turkey
    4.9%
    Indonesia
    3.7%
    Great Britain
    3.3%
    *including exposures to CIS

    Major Sector Breakdown*

    Asset 7
    Communications
    9.6%
    Materials
    8.8%
    Industrials
    6.5%
    Materials
    5.8%
    ETFs
    5.7%
    Real Estate
    5.2%
    *excluding exposures to CIS

    Asset Allocation

    Cash 15.9%
    Bonds (incl. ETFs) 84.1%

    Maturity Buckets*

    35.0%
    0-5 Years
    32.1%
    5-10 Years
    7.6%
    10 Years+
    *based on the Next Call Date

    Performance History (EUR)*

    YTD

    -14.82%

    2021

    0.24%

    2020

    -0.70%

    2019

    10.40%

    2018

    -6.16%

    Annualised Since Inception****

    -2.84%

    * The USD Distributor Share Class (Class B) was launched on 03 November 2017.
    ** Performance figures are calculated using the Value Added Monthly Index "VAMI" principle. The VAMI calculates the total return gained by an investor from reinvestment of any dividends and additional interest gained through compounding.
    *** 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 96.5%
    Euro 3.5%
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