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 asset 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 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

January 2019

The first month of 2019 proved to be substantial for equities. Investors got to experience a dovish Fed and European Central Bank. Weaker Chinese growth and weaker figures in Germany were still present. That being said, market signals of talking regarding the Trade War and the stances the major central banks took led Equities to go up 6% in January. Investors are now putting their cash to work once again given the calmer waters and attractive valuations.

Valuations of stocks have been uplifted. However, in January, markets kept witnessing further deterioration out of China – lower than expected inflation and manufacturing activity contracting for the second time in a month – which could result in a revision of Price Targets lower. At this stage of the business cycle, the US elections up in 2 years and China’s economy showing signs of weakness, the Investment Manager is of the view that a Trade War agreement will be reached. In addition to, the Chinese government and the People’s bank of China have already taken measures to stimulate growth.

For credit markets, the month of January boosted bond prices. US High Yield markets increased by 4.59%; European High Yield markets increased by 2.19%; Global Emerging Markets increased by 4.38%. The major event that sent bond prices uptrend were the Fed and the ECB announcing a dovish stance.

Investment Grade bonds with a short duration are once again attractive, EMs remain to perform well due to a weaker dollar and strong data figures especially from Turkey, Brazil, Russia and Indonesia. China and the Eurozone remain under the impact of the Trade War in terms of figures but much less than 2018.

The Investment Managers (IMs) has built positions in high conviction names in both credit and equities. They are of the opinion that the stocks and bonds in the portfolio should generate alpha for the fund and improve performance as we ride through 2019.