Investment Objectives

The CC Euro High Income Bond Fund Accumulator aims to maximise the total level of return for investors through investment in a diversified portfolio of Bonds. To achieve this objective, the Investment Manager invests primarily in a diversified portfolio of over 65 intermediate term, corporate & government bonds with maturities of 10 years and less.

Investor Profile

A typical investor in the CC Euro High Income Bond Fund Accumulator is:

  • Seeking to accumulate wealth and save over time in a product that re-invests gross dividends automatically.
  • Planning to hold their investment for the medium-to-long term so as to benefit from the compound interest effect.

Fund Rules

The Investment Manager of the CC Euro High Income Bond Fund Accumulator – 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 of the fund. Some of the restrictions include:

  • The fund may not invest more than 10% of its assets in the same company
  • The fund may not keep more than 10% of its assets on deposit with any one credit institution. This limit may be increased to 30% in respect of deposits with an Approved Institution
  • The fund may not invest more than 20% of its assets in any other other fund
  • The fund may not carry out uncovered sales (naked short-selling) of securities or other financial instruments

Commentary

August 2020

Policymakers hoped that the Covid-19 pandemic would recede during the hotter summer months, instigating policymakers to gradually lift restrictions at the start of summer season in the northern hemisphere. However, even though record temperatures were registered in August, the virus has unfortunately continued to spread. There have now been over 25 million cases globally, up from 10 million at the start of July.

Even though the number of new daily cases in the US has started to decline, some regions, including Europe, are now facing a second wave where the daily increase in cases is back close to the levels seen at the height of the crisis in March and April. So far, better testing and tracing capacity has allowed European policymakers to treat this second wave with targeted measures, including travel restrictions or the requirement to wear a face mask in public, instead of national lockdowns. This was done in an effort to better balance public health policies with economic policies.

On the economic front, high-frequency data, such as travel and navigation app usage, point to continued global growth over the third quarter, albeit at a more moderate pace, particularly in the US, than in May and June. However, these challenges haven’t dented investors’ enthusiasm, which seems to have been lifted by a better-than-expected second-quarter earnings season and by the potential for a viable Covid-19 vaccine in the coming months. In this context, risk assets continued to rally while government bonds retreated.

European data showed continued signs of recovery despite the second wave, as economic activity continued to build on July’s initial expansion. Looking at Europe’s largest economy, Germany, PMIs indicated an expansion during the month of August, with Manufacturing PMI, increasing to 52.2, compared to a consensus estimate of 53.0, and a previousreading of 51.0. Services PMI also registered a solid 52.5 compared to expectations of 50.8, however lower than July’s reading of 55.6. Unemployment remained steady at 6.4%.

Consumer confidence remained weak, with leading indicators such as the Eurozone Consumer Confidence improving marginally to -14.7 from -15.0 in the previous month. Meanwhile, the Euro Area’s Manufacturing PMI indicated an expansion to 51.7 compared to 51.8 in the previous month. Euro Area’s services PMI remained in expansionary territory, albeit at a slower pace, at 50.5 in its latest reading. Unemployment edged upward to 7.9% from 7.7%. Collectively the indicators are suggesting that we are still at the very beginning of a fragile economic recovery.

European risk assets continued to benefit from the European Council agreement in July to establish a €750 billion European Union (EU) recovery fund, which has reassured investors about the future of the EU. European equity and bonds markets registered positive investor flows in July and August. In this context, the euro rose 1.1% versus the dollar.

Looking at sovereign yields on the 10-year German Bund, Europe’s mostly sought benchmark closed wider than the previous month at -0.398 compared to -0.531 at the end of last month, with most of the tightening occurring during the last week of August. The yield curve steepened, with a larger movement in the longer end of the curve largely attributed to more confidence about the speed of economic recovery. These moves were also experienced in European peripheral sovereigns.

Within the HY asset space, spreads in August generally tightened, following the risk on approach by the markets that is interpreting a much more swift economic recovery, following the re-opening of a number of economic sectors, in addition to continued supportive fiscal and monetary support measures in place.

The CC Euro High Income fund, bounced higher by 1.6 percent, in line with the upward market moves. On a year-to-date basis, the fund is slightly underperforming on a net basis due to the lower beta of the portfolio, albeit the volatility of the fund has been markedly lower than average. Throughout the month, the manager continued to selective high beta names, including the financial sector, which offered significant opportunities. Moving forward the Managers believe that credit markets will continue to be aided by the support of primarily monetary politicians, creating a positive technical environment. In terms of bond picking, the Managers will continue to monitor the current environment and take opportunities in attractive credit stories.

A quick introduction to our Euro High Income 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 (EUR)

ASSET CLASS

Bonds

MIN. INITIAL INVESTMENT

€2500

FUND TYPE

UCITS

BASE CURRENCY

EUR

RETURN (SINCE INCEPTION)*

11.64%

*View Performance History below
Inception Date: 30 May 2013
ISIN: MT7000007761
Bloomberg Ticker: CALCHAR MV
Entry Charge: None
Total Expense Ratio: 1.40%
Exit Charge: None
Distribution Yield (%): N/A
Underlying Yield (%): 4.51
Distribution: N/A
Total Net Assets: € 41.13 mm
Month end NAV in EUR: 121.71
Number of Holdings: 96
Auditors: Deloitte Malta
Legal Advisor: Ganado & Associates
Custodian: Sparkasse Bank Malta p.l.c.
% of Top 10 Holdings: 24.4

Performance To Date (EUR)

Top 10 Holdings

iShares Euro Corp Large Cap
3.9%
iShares Euro HY Corp
3.0%
2.25% Portugal Treasury 2034
2.5%
5% Nidda BondCo 2025
2.5%
6.5% CMA CGM 2022
2.4%
4% Chemours Co. 2026
2.4%
6% Loxam SAS 2025
2.1%
4.625% Cemex 2024
2.0%
7.5% Garfunkelux 2022
1.9%
5.25% HSBC 2169
1.8%

Major Sector Breakdown*

Financials
21.1%
Consumer Staples
13.1%
Consumer Discretionary
11.5%
Asset 7
Communications
10.5%
Materials
8.3%
Industrials
7.1%
*excluding exposures to CIS

Maturity Buckets*

59.1%
0-5 Years
21.8%
5-10 Years
3.9%
10 Years+
based on the Next Call Date

Credit Ratings*

Average Credit Rating: BB-
*excluding exposures to CIS

Risk & Reward Profile

1
2
3
4
5
6
7
Lower Risk

Potentialy Lower Reward

Higher Risk

Potentialy Higher Reward

Top Holdings by Country*

France
14.1%
Malta
12.3%
Germany
11.0%
Brazil
7.0%
USA
5.7%
UK
4.8%
Switzerland
4.0%
Spain
3.8%
Mexico
3.2%
Ireland
3.0%
*including exposures to CIS

Asset Allocation

Cash 6.2%
Bonds 84.8%
CIS/ETFs 9.0%

Performance History (EUR)*

YTD

-3.80%

2019

7.48%

2018

-6.45%

2017

5.32%

2016

4.96%

Inception*

11.64%

*The Accumulator Share Class (Class A) was launched on 29 May 2013

Currency Allocation

Euro 84.9%
USD 15.1%
Other 0.0%

Risk Statistics

Sharpe Ratio
-0.01 (3Y)
0.24 (5Y)
Std. Deviation
8.86% (3Y)
7.26% (5Y)

Interested in this product?

  • Investment Objectives

    The CC Euro High Income Bond Fund Accumulator aims to maximise the total level of return for investors through investment in a diversified portfolio of Bonds. To achieve this objective, the Investment Manager invests primarily in a diversified portfolio of over 65 intermediate term, corporate & government bonds with maturities of 10 years and less.

  • Investor profile

    A typical investor in the CC Euro High Income Bond Fund Accumulator is:

    • Seeking to accumulate wealth and save over time in a product that re-invests gross dividends automatically.
    • Planning to hold their investment for the medium-to-long term so as to benefit from the compound interest effect.
    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

    • The fund may not invest more than 10% of its assets in the same company
    • The fund may not keep more than 10% of its assets on deposit with any one credit institution. This limit may be increased to 30% in respect of deposits with an Approved Institution
    • The fund may not invest more than 20% of its assets in any other other fund
    • The fund may not carry out uncovered sales (naked short-selling) of securities or other financial instruments
  • Commentary

    August 2020

    Policymakers hoped that the Covid-19 pandemic would recede during the hotter summer months, instigating policymakers to gradually lift restrictions at the start of summer season in the northern hemisphere. However, even though record temperatures were registered in August, the virus has unfortunately continued to spread. There have now been over 25 million cases globally, up from 10 million at the start of July.

    Even though the number of new daily cases in the US has started to decline, some regions, including Europe, are now facing a second wave where the daily increase in cases is back close to the levels seen at the height of the crisis in March and April. So far, better testing and tracing capacity has allowed European policymakers to treat this second wave with targeted measures, including travel restrictions or the requirement to wear a face mask in public, instead of national lockdowns. This was done in an effort to better balance public health policies with economic policies.

    On the economic front, high-frequency data, such as travel and navigation app usage, point to continued global growth over the third quarter, albeit at a more moderate pace, particularly in the US, than in May and June. However, these challenges haven’t dented investors’ enthusiasm, which seems to have been lifted by a better-than-expected second-quarter earnings season and by the potential for a viable Covid-19 vaccine in the coming months. In this context, risk assets continued to rally while government bonds retreated.

    European data showed continued signs of recovery despite the second wave, as economic activity continued to build on July’s initial expansion. Looking at Europe’s largest economy, Germany, PMIs indicated an expansion during the month of August, with Manufacturing PMI, increasing to 52.2, compared to a consensus estimate of 53.0, and a previousreading of 51.0. Services PMI also registered a solid 52.5 compared to expectations of 50.8, however lower than July’s reading of 55.6. Unemployment remained steady at 6.4%.

    Consumer confidence remained weak, with leading indicators such as the Eurozone Consumer Confidence improving marginally to -14.7 from -15.0 in the previous month. Meanwhile, the Euro Area’s Manufacturing PMI indicated an expansion to 51.7 compared to 51.8 in the previous month. Euro Area’s services PMI remained in expansionary territory, albeit at a slower pace, at 50.5 in its latest reading. Unemployment edged upward to 7.9% from 7.7%. Collectively the indicators are suggesting that we are still at the very beginning of a fragile economic recovery.

    European risk assets continued to benefit from the European Council agreement in July to establish a €750 billion European Union (EU) recovery fund, which has reassured investors about the future of the EU. European equity and bonds markets registered positive investor flows in July and August. In this context, the euro rose 1.1% versus the dollar.

    Looking at sovereign yields on the 10-year German Bund, Europe’s mostly sought benchmark closed wider than the previous month at -0.398 compared to -0.531 at the end of last month, with most of the tightening occurring during the last week of August. The yield curve steepened, with a larger movement in the longer end of the curve largely attributed to more confidence about the speed of economic recovery. These moves were also experienced in European peripheral sovereigns.

    Within the HY asset space, spreads in August generally tightened, following the risk on approach by the markets that is interpreting a much more swift economic recovery, following the re-opening of a number of economic sectors, in addition to continued supportive fiscal and monetary support measures in place.

    The CC Euro High Income fund, bounced higher by 1.6 percent, in line with the upward market moves. On a year-to-date basis, the fund is slightly underperforming on a net basis due to the lower beta of the portfolio, albeit the volatility of the fund has been markedly lower than average. Throughout the month, the manager continued to selective high beta names, including the financial sector, which offered significant opportunities. Moving forward the Managers believe that credit markets will continue to be aided by the support of primarily monetary politicians, creating a positive technical environment. In terms of bond picking, the Managers will continue to monitor the current environment and take opportunities in attractive credit stories.

  • 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 (EUR)

    ASSET CLASS

    Bonds

    MIN. INITIAL INVESTMENT

    €2500

    FUND TYPE

    UCITS

    BASE CURRENCY

    EUR

    RETURN (SINCE INCEPTION)*

    11.64%

    *View Performance History below
    Inception Date: 30 May 2013
    ISIN: MT7000007761
    Bloomberg Ticker: CALCHAR MV
    Entry Charge: None
    Total Expense Ratio: 1.40%
    Exit Charge: None
    Distribution Yield (%): N/A
    Underlying Yield (%): 4.51
    Distribution: N/A
    Total Net Assets: € 41.13 mm
    Month end NAV in EUR: 121.71
    Number of Holdings: 96
    Auditors: Deloitte Malta
    Legal Advisor: Ganado & Associates
    Custodian: Sparkasse Bank Malta p.l.c.
    % of Top 10 Holdings: 24.4

    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 Euro Corp Large Cap
    3.9%
    iShares Euro HY Corp
    3.0%
    2.25% Portugal Treasury 2034
    2.5%
    5% Nidda BondCo 2025
    2.5%
    6.5% CMA CGM 2022
    2.4%
    4% Chemours Co. 2026
    2.4%
    6% Loxam SAS 2025
    2.1%
    4.625% Cemex 2024
    2.0%
    7.5% Garfunkelux 2022
    1.9%
    5.25% HSBC 2169
    1.8%

    Top Holdings by Country*

    France
    14.1%
    Malta
    12.3%
    Germany
    11.0%
    Brazil
    7.0%
    USA
    5.7%
    UK
    4.8%
    Switzerland
    4.0%
    Spain
    3.8%
    Mexico
    3.2%
    Ireland
    3.0%
    *including exposures to CIS

    Major Sector Breakdown*

    Financials
    21.1%
    Consumer Staples
    13.1%
    Consumer Discretionary
    11.5%
    Asset 7
    Communications
    10.5%
    Materials
    8.3%
    Industrials
    7.1%
    *excluding exposures to CIS

    Asset Allocation

    Cash 6.2%
    Bonds 84.8%
    CIS/ETFs 9.0%

    Maturity Buckets*

    59.1%
    0-5 Years
    21.8%
    5-10 Years
    3.9%
    10 Years+
    based on the Next Call Date

    Performance History (EUR)*

    YTD

    -3.80%

    2019

    7.48%

    2018

    -6.45%

    2017

    5.32%

    2016

    4.96%

    Inception*

    11.64%

    *The Accumulator Share Class (Class A) was launched on 29 May 2013

    Credit Ratings*

    Average Credit Rating: BB-
    *excluding exposures to CIS

    Currency Allocation

    Euro 84.9%
    USD 15.1%
    Other 0.0%

    Risk Statistics

    Sharpe Ratio
    -0.01 (3Y)
    0.24 (5Y)
    Std. Deviation
    8.86% (3Y)
    7.26% (5Y)
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