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

March 2021

The vaccine rollout remained a key topic through the month of March, with US President Joe Biden pledging to get 200 million Americans vaccinated by his 100 days in office. The main challenge to this target has transitioned from a logistical to an ideological one, where pockets of Americans, particularly Trump supporters, remain hesitant to get inoculated.

March also saw the passage of President Biden’s bumper stimulus package, worth 9% of US GDP. This has led to upgrades in consensus forecasts for US growth this year, with 7% growth now expected. A year on from when markets bottomed out, the momentum has shifted to the reflation trade, with a contrast between US and European short term fates clearly delineated. Apart from an upward shift in the US yield curve, this has also led to the strengthening US Dollar. The 10-year US Treasury yield now stands at 1.75%, vs. 0.5% at the low in August and 0.9% at the start of the year.

The rise in bond yields has been closely correlated with significant outperformance for financials and value tilted assets. Higher commodity prices have also helped value, with oil up 22% and copper up 13% year-to-date. The common theme driving all these moves has been rising optimism about the outlook for global growth.

Oil markets were temporarily jolted by drama in the Suez Canal, where a container ship blocked the flow of a trade channel which accounts for around 15% of world trade for just under a week. This brought into the limelight the current strong level of trade, with excessive demand for cargo TEU propelling freight rates four fold.

With over 37% of American and 58% of British adults now having received at least one dose of vaccine and the number of people being hospitalised with Covid-19 much lower than at the start of the year, the continued risk-on mode in markets makes sense, as investors look ahead to a hopefully sustainable reopening of their economies.

However, the vaccine rollout hasn’t been as successful for some other developed countries, and even less so for developing economies. Indeed during the month there was friction between the UK and the European Union over the honouring of commitments to deliver vaccine supplies. Many European countries have only a small fraction of their population inoculated, drawing criticism from stakeholders. The risk of delays to the European recovery remain strong, as countries like Italy and France remain trapped by crippling lockdowns due to elevated cases of Covid-19.

Inflation concerns were topical throughout the month due to concerns over stimulus measures, combined with pent-up savings, could lead to a pickup in inflation and force the hand of policymakers. This risk is seen as higher in the US compared to the EU, due to the differential in expected growth rates for the regions.

In March, European sovereign and IG yields gave up some of the US induced tightening in February, and yields of the riskiest junk bonds and lower ranking bank debt reached record levels in this yield-starved environment.

From the data front, Europe’s largest economy, Germany reported strong PMI data for both manufacturing and services. Germany’s manufacturing PMI posted a level of 66.6, up from a previous figure of 60.7 and a surprising figure of 50.8 for services, up from 45.7. This is the first expansionary reading since the beginning of the pandemic. The readings pointed to robust growth in factory activity, amid further gains in output and new orders.

Eurozone’s manufacturing PMI was also stronger, at 62.5 compared to 57.9 in February. Meanwhile, services PMI of the single currency returned a level of 48.8 from 45.7 in the previous month, reflecting the wider restrictions in place in European economies. Consumer confidence – a metric that the level of consumer confidence in economic activity in the euro area, increased to -10.8 points in March from -14.8 points a month earlier consolidating an upward trend.

We continue to believe that the pace of economic recovery in Europe will be different to that in the US, therefore we will tactfully time the exiting from European sovereigns with caution. Indeed, yields tightened throughout the month despite the increase in US yields.

Yields on Europe’s most sought after benchmark; the 10-year German Bund, closed marginally lower than the previous month at -0.292% compared to -0.292% at the beginning of March. Similarly, Italy’s 10-year sovereign yield closed the month 10bps tighter at 0.66%, and the Spanish 10-year closed 7 bps tighter at 0.34%.

The CC Euro High Income Bond Fund increased by 0.36 per cent throughout the month. Throughout the month the Manager continued to seek pockets of value by looking into attractive credit stories, primarily within the retail, financials, real estate and transportation segments.

Going 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 which should continue to add value to the portfolio.

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)*

39.03%

*View Performance History below
Inception Date: 01 Sep 2011
ISIN: MT7000003059
Bloomberg Ticker: CALCHIE MV
Entry Charge: Up to 2.5%
Total Expense Ratio: 1.63%
Exit Charge: None
Distribution Yield (%): 3.30
Underlying Yield (%): 4.40
Distribution: 31/03 and 30/09
Total Net Assets: € 42.68 mn
Month end NAV in EUR: 89.54
Number of Holdings: 81
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
% of Top 10 Holdings: 23.9

Performance To Date (EUR)

Top 10 Holdings

iShares Euro Corp Large Cap
3.1%
iShares Euro HY Corp
3.0%
iShares Falling Angels HY Corp
2.6%
4% Chemours Co. 2026
2.4%
5% Nidda Bondco GMBH 2025
2.4%
5.25% HSBC Holdings plc perp
2.2%
6% Loxam SAS 2025
2.2%
4.625% Volkswagen perp
2.1%
4.375% Cheplapharm 2028
2.0%
3.5% Eircom Finance 2026
1.9%

Major Sector Breakdown*

Financials
12.1%
Asset 7
Communications
11.2%
Consumer Discretionary
6.7%
Industrials
4.9%
Materials
4.9%
Health Care
4.8%
*excluding exposures to CIS

Maturity Buckets*

62.1%
0-5 Years
17.8%
5-10 Years
1.9%
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*

Germany
10.9%
France
9.4%
Spain
5.5%
Italy
4.8%
Brazil
3.9%
Malta
3.9%
Netherlands
3.6%
Ireland
3.3%
Turkey
3.2%
India
1.6%
*including exposures to CIS

Asset Allocation

Cash 8.6%
Bonds 81.8%
CIS/ETFs 9.6%

Performance History (EUR)*

YTD

0.28%

2020

-0.15%

2019

7.47%

2018

-6.44%

2017

5.31%

Annualised Since Inception***

3.50%

*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 84.0%
USD 16.0%
Other 0.0%

Risk Statistics

Sharpe Ratio
0.14 (3Y)
0.38 (5Y)
Std. Deviation
8.74% (3Y)
6.95% (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

    March 2021

    The vaccine rollout remained a key topic through the month of March, with US President Joe Biden pledging to get 200 million Americans vaccinated by his 100 days in office. The main challenge to this target has transitioned from a logistical to an ideological one, where pockets of Americans, particularly Trump supporters, remain hesitant to get inoculated.

    March also saw the passage of President Biden’s bumper stimulus package, worth 9% of US GDP. This has led to upgrades in consensus forecasts for US growth this year, with 7% growth now expected. A year on from when markets bottomed out, the momentum has shifted to the reflation trade, with a contrast between US and European short term fates clearly delineated. Apart from an upward shift in the US yield curve, this has also led to the strengthening US Dollar. The 10-year US Treasury yield now stands at 1.75%, vs. 0.5% at the low in August and 0.9% at the start of the year.

    The rise in bond yields has been closely correlated with significant outperformance for financials and value tilted assets. Higher commodity prices have also helped value, with oil up 22% and copper up 13% year-to-date. The common theme driving all these moves has been rising optimism about the outlook for global growth.

    Oil markets were temporarily jolted by drama in the Suez Canal, where a container ship blocked the flow of a trade channel which accounts for around 15% of world trade for just under a week. This brought into the limelight the current strong level of trade, with excessive demand for cargo TEU propelling freight rates four fold.

    With over 37% of American and 58% of British adults now having received at least one dose of vaccine and the number of people being hospitalised with Covid-19 much lower than at the start of the year, the continued risk-on mode in markets makes sense, as investors look ahead to a hopefully sustainable reopening of their economies.

    However, the vaccine rollout hasn’t been as successful for some other developed countries, and even less so for developing economies. Indeed during the month there was friction between the UK and the European Union over the honouring of commitments to deliver vaccine supplies. Many European countries have only a small fraction of their population inoculated, drawing criticism from stakeholders. The risk of delays to the European recovery remain strong, as countries like Italy and France remain trapped by crippling lockdowns due to elevated cases of Covid-19.

    Inflation concerns were topical throughout the month due to concerns over stimulus measures, combined with pent-up savings, could lead to a pickup in inflation and force the hand of policymakers. This risk is seen as higher in the US compared to the EU, due to the differential in expected growth rates for the regions.

    In March, European sovereign and IG yields gave up some of the US induced tightening in February, and yields of the riskiest junk bonds and lower ranking bank debt reached record levels in this yield-starved environment.

    From the data front, Europe’s largest economy, Germany reported strong PMI data for both manufacturing and services. Germany’s manufacturing PMI posted a level of 66.6, up from a previous figure of 60.7 and a surprising figure of 50.8 for services, up from 45.7. This is the first expansionary reading since the beginning of the pandemic. The readings pointed to robust growth in factory activity, amid further gains in output and new orders.

    Eurozone’s manufacturing PMI was also stronger, at 62.5 compared to 57.9 in February. Meanwhile, services PMI of the single currency returned a level of 48.8 from 45.7 in the previous month, reflecting the wider restrictions in place in European economies. Consumer confidence – a metric that the level of consumer confidence in economic activity in the euro area, increased to -10.8 points in March from -14.8 points a month earlier consolidating an upward trend.

    We continue to believe that the pace of economic recovery in Europe will be different to that in the US, therefore we will tactfully time the exiting from European sovereigns with caution. Indeed, yields tightened throughout the month despite the increase in US yields.

    Yields on Europe’s most sought after benchmark; the 10-year German Bund, closed marginally lower than the previous month at -0.292% compared to -0.292% at the beginning of March. Similarly, Italy’s 10-year sovereign yield closed the month 10bps tighter at 0.66%, and the Spanish 10-year closed 7 bps tighter at 0.34%.

    The CC Euro High Income Bond Fund increased by 0.36 per cent throughout the month. Throughout the month the Manager continued to seek pockets of value by looking into attractive credit stories, primarily within the retail, financials, real estate and transportation segments.

    Going 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 which should continue to add value to the portfolio.

  • 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)*

    39.03%

    *View Performance History below
    Inception Date: 01 Sep 2011
    ISIN: MT7000003059
    Bloomberg Ticker: CALCHIE MV
    Entry Charge: Up to 2.5%
    Total Expense Ratio: 1.63%
    Exit Charge: None
    Distribution Yield (%): 3.30
    Underlying Yield (%): 4.40
    Distribution: 31/03 and 30/09
    Total Net Assets: € 42.68 mn
    Month end NAV in EUR: 89.54
    Number of Holdings: 81
    Auditors: Deloitte Malta
    Legal Advisor: Ganado Advocates
    Custodian: Sparkasse Bank Malta p.l.c.
    % of Top 10 Holdings: 23.9

    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
    3.1%
    iShares Euro HY Corp
    3.0%
    iShares Falling Angels HY Corp
    2.6%
    4% Chemours Co. 2026
    2.4%
    5% Nidda Bondco GMBH 2025
    2.4%
    5.25% HSBC Holdings plc perp
    2.2%
    6% Loxam SAS 2025
    2.2%
    4.625% Volkswagen perp
    2.1%
    4.375% Cheplapharm 2028
    2.0%
    3.5% Eircom Finance 2026
    1.9%

    Top Holdings by Country*

    Germany
    10.9%
    France
    9.4%
    Spain
    5.5%
    Italy
    4.8%
    Brazil
    3.9%
    Malta
    3.9%
    Netherlands
    3.6%
    Ireland
    3.3%
    Turkey
    3.2%
    India
    1.6%
    *including exposures to CIS

    Major Sector Breakdown*

    Financials
    12.1%
    Asset 7
    Communications
    11.2%
    Consumer Discretionary
    6.7%
    Industrials
    4.9%
    Materials
    4.9%
    Health Care
    4.8%
    *excluding exposures to CIS

    Asset Allocation

    Cash 8.6%
    Bonds 81.8%
    CIS/ETFs 9.6%

    Maturity Buckets*

    62.1%
    0-5 Years
    17.8%
    5-10 Years
    1.9%
    10 Years+
    *based on the Next Call Date

    Performance History (EUR)*

    YTD

    0.28%

    2020

    -0.15%

    2019

    7.47%

    2018

    -6.44%

    2017

    5.31%

    Annualised Since Inception***

    3.50%

    *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 84.0%
    USD 16.0%
    Other 0.0%

    Risk Statistics

    Sharpe Ratio
    0.14 (3Y)
    0.38 (5Y)
    Std. Deviation
    8.74% (3Y)
    6.95% (5Y)
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