Global Balanced Income Fund

The Fund seeks to provide stable, long-term capital appreciation by investing in a diversified portfolio of local and international bonds, equities and other income-generating assets. The Investment Manager shall diversify the assets of the Fund among different assets classes. The manager may invest in both Investment Grade and High Yield bonds rated at the time of investment at least “B-” by S&P, or in bonds determined to be of comparable quality, provided that the Fund may invest up 10% in non- rated bonds, whilst maintain an exposure to direct rated bonds of at least 25% of the value of the Fund. Investments in equities may include but are not limited to dividend-paying securities, equities, exchange traded funds as well as through the use of Collective Investment Schemes.

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

The Fund is classified under Article 6 of the SFDR meaning that the investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities.

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

• We shall invest primarily in a diversified portfolio of listed transferable securities across a wide spectrum of industries and sectors primarily via bonds, equities and eligible ETFs. We may invest in these asset classes either directly or indirectly through UCITS Funds and/ or eligible non UCITS Funds
• We intend to diversify the assets of the Sub-Fund broadly among countries, industries and sectors, but reserve the right to invest a substantial portion of the Sub-Fund’s assets in one or more countries (or regions) if economic and business conditions warrant such investments
• Investments in equity securities may include, but are not limited to, dividend-paying securities, equities, ETFs and preferred shares of global issuers. At our discretion, we may also invest indirectly in equities and equity-related instruments through the use of collective investment schemes. The Sub-Fund will generally, but not exclusively, invest in blue chip issuers listed on Approved Regulated Markets, including equities listed on the Malta Stock Exchange, where applicable
• We shall manage the credit risk and will aim to manage interest rate risk through credit analysis and credit diversity. We may invest in both investment grade (corporate and sovereign) and high yield bonds that have a credit rating of at least “B-” by S&P (or rating equivalent issued by other reputable rating agencies) at the time of investment, provided that the Sub-Fund may invest a maximum of 10% of its assets in non-rated debt securities, including those listed on the Malta Stock Exchange. We will, at all times, maintain an exposure to direct rated bonds, whether investment grade or high yield, of at least 25% of the value of the Sub-Fund
• For temporary or defensive purposes, the Sub-Fund may invest in short-term fixed income instruments, money market funds, cash and cash equivalents. The Sub-Fund may also hold cash and cash equivalents on an ancillary basis or cash management purposes, pending investment in accordance with its Investment Policy and to meet operating expenses and redemption requests.The Sub-Fund may invest in Real Estate Investment Trusts (“REITs”) via UCITS-eligible ETFs and/or CIS and securities related to real assets (including but not limited to real estate, agriculture, and precious metals-related securities) such as equities, bonds, and ETFs as well as CISs as long as these constitute eligible assets under the UCITS Directive
• The Sub-Fund may invest in options, futures and forwards for risk management and hedging purposes only (“Hedging Instruments”)
• Other than any margins required for these Hedging Instruments, the Sub-Fund will not employ leverage

August 2025

Introduction

August managed maintaining the benevolent momentum in financial markets as resilient earnings, moderating inflation prints, and improved geopolitical stability continued to support investor sentiment. The US new commercial policy marked notable progress as the temporary tariff truce with China was extended into year-end, and trade negotiations with India advanced toward a preliminary deal covering technology and services. On the geopolitical front, the implementation of a durable monitoring mechanism in the Middle East helped maintaining the ceasefire between Israel and Iran, removing a major source of volatility for oil markets. Brent crude traded within a narrow band, alleviating immediate concerns over imported inflation. The prevailing narrative is increasingly one of cautious optimism – policymakers appear to have regained control of both inflation and geopolitical flashpoints, while global trade flows are gradually normalizing. However, increased attacks from the Trump administration over the FED independence including over FOMC members, and against other independent agencies keeps markets on their toes. What feels now like an enduring win for the US administration – easing tariffs tensions, steering fiscal expansion without derailing growth, benefiting from soft commodity prices – could just as easily morph into a fragile outcome if policy missteps are generated by too much self-confidence unchecked by other stakeholders. So far, economists’ forecasts as regards the negative impact on the global economy of the new tariff policies have been contradicted in real life. This has become quite a familiar view in recent years as economists failed to forecast the post Covid inflationary pressures while duly forecasting a recession in 2023 following the fast interest rates hiking cycle. However, that does not mean market participants should completely discount economists’ views. Sometimes they do get it right.

From the monetary front, the FED action was mainly concentrated during its famous Jackson Hole summit where Chairman Powell signalled a possible interest rate cut during the September meeting, noting that risks to the job market were rising but also noting that inflation remained a threat. While many analysists now anticipate that the FED will resume its easing policy, the timing and magnitude of cuts remain uncertain. In Europe, the ECB did not take any specific actions, while its focus on maintaining price stability and managing inflation is currently in check with its 2% target. The main issue remains the global economic uncertainty despite the EU striking a trade agreement with the US, as the growth in the euro zone has remained sluggish even as rated have come down.

August proved a more complicated month for global equity markets, where the first real signs of tariff headwinds began to surface. While headline indices narrowly escaped deeper losses, the undercurrents were less reassuring. Technology and AI-linked names, which until recently carried the rally almost single-handedly, finally lost some steam as investors started questioning whether valuation metrics stretched to 2021-like extremes could still be justified. Year-to-date, the global technology sector was left essentially flat—a rather striking outcome considering the constant buzz around artificial intelligence in 2025. The broader feeling was one of markets caught between two narratives: on one hand, retail enthusiasm, IPO euphoria, and buy-the-dip reflexes kept the risk-on mood alive; on the other, the dawning realization that tariffs, higher bond yields, and fragile consumer sentiment could eventually bite. In short, the party was still going, but the music no longer played with the same unshakable rhythm—leaving investors to wonder whether this was just a pause in the exuberance, or the first cracks in a fragile façade. The next market reflex will most likely be riding the tailwind of fresh interest rate cuts on offer from the FED, under more or less political pressure from the Trump administration. While this positive impact on equity markets will be more swiftly by effectively providing more liquidity, the same reach over the real economy should take considerably longer. In the meantime, it is more likely that the overriding disparity between the stock market and the real economy will only grow larger.        

Market Environment and Performance

In the Euro area, business activity continued to expand in August, with the Composite PMI rising to 51.1, up from 50.9 in July and above expectations of 50.7. Growth was driven by a third consecutive expansion in services (50.7 vs. 51) and a notable rebound in manufacturing (50.5 vs. 49.8), marking the first growth in this sector in over three years. Aggregate new orders increased for the first time in 14 months, supporting a sixth consecutive month of job growth, even as new export orders fell. Headline inflation held steady at 2.0%, slightly above expectations. This represents the second consecutive month in which inflation aligned with the ECB’s official target.

The U.S. economy grew at an annualized rate of 3.3% in Q2 2025, rebounding sharply from a 0.5% contraction in Q1, according to second estimates. Forward-looking indicators suggest economic momentum carried into Q3. The S&P Global U.S. Composite PMI rose to 55.4 in August, up from 55.1 in July, marking the fastest pace of growth this year. The services sector maintained solid expansion, while manufacturing rebounded strongly, with the PMI climbing to 53.3 from 49.8 in July, its highest level since May 2022.

In August, global equity markets narrowly avoided their first monthly decline since Liberation Day, as sector rotation helped offset profit-taking in technology stocks. This dynamic created a somewhat unexpected outcome: despite the sustained enthusiasm around the AI investment theme in 2025, global technology sector was effectively flat by month-end. This does not signal a reversal of growth factor outperformance, but rather a pause, as investors reassessed whether current valuation levels remain justified. At the same time, recent AI breakthroughs by domestic technology firms fuelled a sharp rally in Chinese equities, evoking parallels with speculative episodes seen in 2015 and 2021. The S&P 500 index fell 0.51%, with gains in consumer discretionary and value sectors partly offsetting losses in technology and industrials. European markets were more balanced: the EuroStoxx50 advanced 0.60%, while the DAX declined 0.68%, supported by relative strength in staples, healthcare, and energy.

In fixed income, U.S. Treasuries rallied as investors priced in a higher probability of a September Fed rate cut, with the 10-year yield ending the month at 4.23%, down from 4.37% in July. Short- to medium-term maturities outperformed, while longer-dated bonds remained pressured by fiscal concerns and questions surrounding the Federal Reserve’s independence. European sovereign bonds were more muted, with yields fluctuating amid ongoing political uncertainty. Corporate credit markets proved resilient, with U.S. investment-grade and high-yield bonds returning 1.05% and 1.20% respectively, while European credit was broadly flat.

Fund performance

In the month of August, the Global Balanced Income Fund registered a marginal 0.15% loss. On the equity allocation, the Fund’s allocation has been reviewed and rebalanced, as the Manager aligned it to the overriding market sentiment. New conviction names Fortinet and Robinhood Markets Inc have been added given expectations of tactical gains following a market overshoot on a rather conservative management guideline given in the Q2 earnings release in the first case, and secular trends in millennials investing behaviour in the second case. As well, the ASML Holding exposure has been increased based on a positive technical outlook. Consequently, the Salesforce Inc holding has been liquidated on decreased upside potential and negative market sentiment going forward. From a fixed-income perspective, the manager following earlier adjustments; increasing allocations to income‑generating assets, and maintaining a balanced interest‑rate duration, the manager opted to hold positions steady over the period.

Market and investment outlook

Going forward, the Manager notes that the economic environment is beginning to exhibit early signs of weakness, which may intensify as the effects of US tariffs gradually permeate global trade and supply chains. Inflationary pressures, in particular, could worsen, but also the US labour market might further weaken; however, potential support might come from an anticipated easing action from the FED, the size of which remains uncertain at this point. Nevertheless, there are limiting prospects for a constructive economic outlook through year-end. Consequently, it is rather unclear how much this could help consumer sentiment, particularly in the short term, thus diminishing expectations for a positive economic outlook to the end of the year. Given the prospect of rate cuts, credit markets are likely to benefit from price appreciation. Longer-duration bonds are expected to outperform, while the short end of the curve could also see a positive boost once central banks act.

From the equity front, the Manager remains cautious, as current equity market momentum appears misaligned with looming risks, particularly given the persistence of unfavourable seasonality. The portfolio strategy continues to emphasize long-term convictions in high-quality companies benefiting from secular growth drivers that are less dependent on cyclical macroeconomic conditions. Capital will be deployed opportunistically across selected sectors, with cash reserves serving as dry powder to take advantage of market dislocations.