Investment Objectives

The CC Euro High Income Bond Fund Distributor aims to maximise the total level of return for investors through investment in a diversified portfolio of Bonds. 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 Distributor is:

  • Seeking to earn a high level of regular income
  • Seeking an actively managed & diversified investment in high income bonds.

Fund Rules

The Investment Manager of the CC Euro High Income Bond Fund has the duty to ensure that the underlying holdings 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 funds. Some of the restrictions include:

  • The fund may not invest more than 10% of its assets in securities listed by the same body
  • 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 fund
  • The fund may not carry out uncovered sales (naked short-selling) of securities or other financial instruments

Commentary

April 2020

Risk assets have rallied throughout the month of April as the fear and panic associated with the outbreak of the COVID-19 virus, which lead to black-swan events in March eased by government policy interventions. In our view, the propagation of the shock to financial markets due to the virus outbreak is directly linked to the evolution of the virus and the duration of the containment measures. 

Indeed the swift actions taken primarily by Federal Reserve (Fed), emerged crucial in calming waters across the credit space. Despite that, initially markets unimpressed by actions taken by major central banks, the decision taken by the Fed on the 9th of April, in which it expanded its list of eligible bonds, was a clear signal that monetary politicians will do whatever it takes. The move eased both market and corporate liquidity tensions. In fact, following the announcement we have seen healthier liquidity in secondary markets, while the primary market re-opened following a standstill month in March. 

In Europe, EU leaders agreed on the need for an emergency fund of at least 1 trillion euros. However, as opposed to the more agile actions in the U.S., dissent from countries such as Germany on the mechanics of such aid, continued to weigh on investors sentiment. To this end, many continue to question the feasibility of the Union going forward, with Italy in primis being at the forefront

From the data front, Europe commenced feeling the pinch of covid-19 with economic numbers showing sharp reversions in March and April. Looking at Europe’s largest economy, Germany, PMIs continued their downward trend reflecting the weak economic conditions brought about by covid-19. For the month of April Manufacturing PMI, dwindled lower to 34.4 from a consensus estimate of 39, and lower from the previous 45.4, thus way below the 50 expansionary level. Meanwhile, unemployment ticked higher to 5.8%, while leading indicators such as the German business expectations also pointed to lower levels of 69.4 from a consensus level of 75. 

Meanwhile, the Euro Area’s Manufacturing PMI, pointing to a continued contraction in factory activity, with preliminary survey estimates of 38.0 compared to 44.5, far below February’s one year high of 49.2. Similarly, Euro Area’s services PMI was revised lower to 26.4 in its latest reading, with a preliminary estimate of 22.8 for the next release, and well below February’s 52.6. Moreover, consumer confidence within the Euro area continued deteriorating to -22.7 from -11.6 in the previous month. Led by an exceptionally strong fall in expectations concerning the general economic situation, the decline was the largest on record. Unemployment continued its upward trajectory to 7.4% from 7.3%, with many economists expecting further deterioration.

Yields on Europe’s mostly sought benchmark, the 10-year German Bund, closed tighter than the previous month at -0.588 compared to -0.473 at the end of last month. Yields across all of the curve tightened, largely attributed to ECB policy action, which seems that it will continue to do what ever it takes to combat the current unprecedented scenario.  Within the HY asset space, yields in April generally tightened, following the announced monetary intervention with Europe outperforming the US.

The CC Euro High Income fund, bounced higher by 4.7 percent, in line with the upward market moves. While on a year-to-date basis, the fund is slightly underperforming on a net basis due to the lower beta of the portfolio. Throughout the month, the manager reduced the portfolio’s sovereign exposure, while opened an exposure into the more senior notes of Nidda Healthcare, a German generic drug maker. Going forward the Manager believes that further stimulus will be enacted and this should further ease market liquidity issues and be supportive for credit markets. We continue to believe that at this juncture liquidity assessment is crucial given the circumstances 

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)*

23.75%

*View Performance History below
Inception Date: 01 Sep 2011
ISIN: MT7000003059
Bloomberg Ticker: CALCHIE MV
Entry Charge: Up to 2.5%
Total Expense Ratio: 1.40%
Exit Charge: None
Distribution Yield (%): 3.500
Underlying Yield (%): 4.99
Distribution: 31/03 and 30/09
Total Net Assets: € 38.27 m
Month end NAV in EUR: 81.01
Number of Holdings: 97
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
% of Top 10 Holdings: 21.2

Performance To Date (EUR)

Top 10 Holdings

Ishares Euro HIY Corp
3.0%
5% Nidda Bondco 2025
2.5%
2.25% Portugal Treasury 2034
2.3%
4% Chemours 2026
2.2%
Ishares Euro Large Capital
2.0%
4.625% Cemex Finance 2024
2.0%
7% Marb Bondco 2024
1.9%
5.50% Rabobank perp.
1.9%
5.375% Ineos Group 2024
1.8%
7.50% Garfunkelux 2022
1.7%

Major Sector Breakdown*

Financials
24.0%
Consumer Staples
12.5%
Consumer Discretionary
11%
Asset 7
Communications
7.8%
Materials
7.7%
Industrials
6.8%
*excluding exposures to CIS

Maturity Buckets*

59.9%
0-5 Years
23.0%
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*

Malta
13.8%
France
11.9%
Germany
9.6%
Brazil
7.3%
USA
5.4%
Spain
4.9%
Switzerland
4.7%
UK
4.3%
Russia
3.7%
Mexico
3.2%
*including exposures to CIS

Asset Allocation

Cash 6.1%
Bonds 86.8%
CIS/ETFs 7.1%

Performance History (EUR)*

YTD

-10.87%

2019

7.47%

2018

-6.44%

2017

5.31%

2016

4.97%

Inception***

23.75%

*Data in the chart does not include any dividends distributed since the Fund was launched on 1st September 2011.
**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
***The Distributor Share Class (Class D) was launched on 01 September 2011.

Currency Allocation

Euro 84.3%
USD 15.7%
Other 0.0%

Risk Statistics

Sharpe Ratio
-0.27 (3Y)
-0.07 (5Y)
Std. Deviation
8.41 (3Y)
7.03 (5Y)

Interested in this product?

  • Investment Objectives

    The CC Euro High Income Bond Fund Distributor aims to maximise the total level of return for investors through investment in a diversified portfolio of Bonds. 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 Distributor is:

    • Seeking to earn a high level of regular income
    • Seeking an actively managed & diversified investment in high income bonds.
    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 securities listed by the same body
    • 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 fund
    • The fund may not carry out uncovered sales (naked short-selling) of securities or other financial instruments
  • Commentary

    April 2020

    Risk assets have rallied throughout the month of April as the fear and panic associated with the outbreak of the COVID-19 virus, which lead to black-swan events in March eased by government policy interventions. In our view, the propagation of the shock to financial markets due to the virus outbreak is directly linked to the evolution of the virus and the duration of the containment measures. 

    Indeed the swift actions taken primarily by Federal Reserve (Fed), emerged crucial in calming waters across the credit space. Despite that, initially markets unimpressed by actions taken by major central banks, the decision taken by the Fed on the 9th of April, in which it expanded its list of eligible bonds, was a clear signal that monetary politicians will do whatever it takes. The move eased both market and corporate liquidity tensions. In fact, following the announcement we have seen healthier liquidity in secondary markets, while the primary market re-opened following a standstill month in March. 

    In Europe, EU leaders agreed on the need for an emergency fund of at least 1 trillion euros. However, as opposed to the more agile actions in the U.S., dissent from countries such as Germany on the mechanics of such aid, continued to weigh on investors sentiment. To this end, many continue to question the feasibility of the Union going forward, with Italy in primis being at the forefront

    From the data front, Europe commenced feeling the pinch of covid-19 with economic numbers showing sharp reversions in March and April. Looking at Europe’s largest economy, Germany, PMIs continued their downward trend reflecting the weak economic conditions brought about by covid-19. For the month of April Manufacturing PMI, dwindled lower to 34.4 from a consensus estimate of 39, and lower from the previous 45.4, thus way below the 50 expansionary level. Meanwhile, unemployment ticked higher to 5.8%, while leading indicators such as the German business expectations also pointed to lower levels of 69.4 from a consensus level of 75. 

    Meanwhile, the Euro Area’s Manufacturing PMI, pointing to a continued contraction in factory activity, with preliminary survey estimates of 38.0 compared to 44.5, far below February’s one year high of 49.2. Similarly, Euro Area’s services PMI was revised lower to 26.4 in its latest reading, with a preliminary estimate of 22.8 for the next release, and well below February’s 52.6. Moreover, consumer confidence within the Euro area continued deteriorating to -22.7 from -11.6 in the previous month. Led by an exceptionally strong fall in expectations concerning the general economic situation, the decline was the largest on record. Unemployment continued its upward trajectory to 7.4% from 7.3%, with many economists expecting further deterioration.

    Yields on Europe’s mostly sought benchmark, the 10-year German Bund, closed tighter than the previous month at -0.588 compared to -0.473 at the end of last month. Yields across all of the curve tightened, largely attributed to ECB policy action, which seems that it will continue to do what ever it takes to combat the current unprecedented scenario.  Within the HY asset space, yields in April generally tightened, following the announced monetary intervention with Europe outperforming the US.

    The CC Euro High Income fund, bounced higher by 4.7 percent, in line with the upward market moves. While on a year-to-date basis, the fund is slightly underperforming on a net basis due to the lower beta of the portfolio. Throughout the month, the manager reduced the portfolio’s sovereign exposure, while opened an exposure into the more senior notes of Nidda Healthcare, a German generic drug maker. Going forward the Manager believes that further stimulus will be enacted and this should further ease market liquidity issues and be supportive for credit markets. We continue to believe that at this juncture liquidity assessment is crucial given the circumstances 

  • 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)*

    23.75%

    *View Performance History below
    Inception Date: 01 Sep 2011
    ISIN: MT7000003059
    Bloomberg Ticker: CALCHIE MV
    Entry Charge: Up to 2.5%
    Total Expense Ratio: 1.40%
    Exit Charge: None
    Distribution Yield (%): 3.500
    Underlying Yield (%): 4.99
    Distribution: 31/03 and 30/09
    Total Net Assets: € 38.27 m
    Month end NAV in EUR: 81.01
    Number of Holdings: 97
    Auditors: Deloitte Malta
    Legal Advisor: Ganado Advocates
    Custodian: Sparkasse Bank Malta p.l.c.
    % of Top 10 Holdings: 21.2

    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 HIY Corp
    3.0%
    5% Nidda Bondco 2025
    2.5%
    2.25% Portugal Treasury 2034
    2.3%
    4% Chemours 2026
    2.2%
    Ishares Euro Large Capital
    2.0%
    4.625% Cemex Finance 2024
    2.0%
    7% Marb Bondco 2024
    1.9%
    5.50% Rabobank perp.
    1.9%
    5.375% Ineos Group 2024
    1.8%
    7.50% Garfunkelux 2022
    1.7%

    Top Holdings by Country*

    Malta
    13.8%
    France
    11.9%
    Germany
    9.6%
    Brazil
    7.3%
    USA
    5.4%
    Spain
    4.9%
    Switzerland
    4.7%
    UK
    4.3%
    Russia
    3.7%
    Mexico
    3.2%
    *including exposures to CIS

    Major Sector Breakdown*

    Financials
    24.0%
    Consumer Staples
    12.5%
    Consumer Discretionary
    11%
    Asset 7
    Communications
    7.8%
    Materials
    7.7%
    Industrials
    6.8%
    *excluding exposures to CIS

    Asset Allocation

    Cash 6.1%
    Bonds 86.8%
    CIS/ETFs 7.1%

    Maturity Buckets*

    59.9%
    0-5 Years
    23.0%
    5-10 Years
    3.9%
    10 Years+
    *based on the Next Call Date

    Performance History (EUR)*

    YTD

    -10.87%

    2019

    7.47%

    2018

    -6.44%

    2017

    5.31%

    2016

    4.97%

    Inception***

    23.75%

    *Data in the chart does not include any dividends distributed since the Fund was launched on 1st September 2011.
    **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
    ***The Distributor Share Class (Class D) was launched on 01 September 2011.

    Credit Ratings*

    Average Credit Rating: BB-
    *excluding exposures to CIS

    Currency Allocation

    Euro 84.3%
    USD 15.7%
    Other 0.0%

    Risk Statistics

    Sharpe Ratio
    -0.27 (3Y)
    -0.07 (5Y)
    Std. Deviation
    8.41 (3Y)
    7.03 (5Y)
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