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

October 2020

October saw a sharp decline in risk sentiment across financial markets from the post-Covid highs of late summer, as case counts rose to new highs across Europe and the US. Market performance remains inextricably correlated to the evolution of the virus, as it dictates the actions of governments worldwide.

Up until October, better testing and tracing capacity had allowed European policymakers to treat this second wave with targeted measures, including travel restrictions or the requirement to wear a facemask in public, instead of national lockdowns. These measures however were deemed to be insufficient in the face of record-breaking virus cases, and more aggressive action was taken by most European governments, with the aim of possibly decreasing them in time for the Christmas period. Policymakers are relying on the arrival of a viable vaccine in the first half of 2021.

With partial national shutdowns announced in the two largest European economies and further restrictions across the continent in the face of quickly rising Covid-19 cases, and similar reports across the Atlantic, most financial markets were significantly impacted, recording their worst performance since March.

Expectedly, data is becoming a very sensitive element for market participants as it depicts the strength of the recovery, particularly in light of the announcements of further restrictions throughout the month. Economic data confirmed that the pace of recovery stalled over the summer and momentum remains tentative in Europe.

Looking at Europe’s largest economy, Germany, PMIs indicated an expansion during the month of October, with Manufacturing PMI, increasing to 58.2, compared to a consensus estimate of 58.0, and a previous reading of 58.0. Services PMI was less impressive, coming in at 49.5, signaling a contraction, compared to 50.6 in the previous month. Meanwhile, the Euro Area’s Manufacturing PMI indicated an expansion to 54.8, slightly above expectations, while services PMI deteriorated further to 46.9 from a previous reading of 48.0. Output has shown signs of recovery, but remained well-below pre-pandemic levels, with significant divergence form the largest economies.

Furthermore, both lagging and leading indicators showed some weakness with unemployment within the Eurozone area inching upwards to 8.3% on a revised estimate. Moreover, consumer confidence remained stagnant, with readings coming in at -15.5. Collectively, despite some positive signs, indicators are suggesting that we are still at the very beginning of a fragile economic recovery.

Looking at sovereign yields on the 10-year German Bund, Europe’s most sought benchmark closed tighter than the previous month at -0.625 compared to -0.521 at the end of last month, with most of the tightening occurring during the last week of October, in parallel with the new restrictions. The yield curve experienced a parallel shift downwards, in line with the increased volatility in the marketplace during October. These moves were also experienced in European peripheral sovereigns.

October saw the most issuance in speculative grade bonds in Europe since July. There is just not enough supply to satiate demand and the recent European Union SURE deal has been a good illustration. There is still a lot of cash in the market to be invested, which should act as a strong bid for credit as an asset class.

Within the HY asset space, risk assets remained under pressure, closing off the month of October with a negative 0.27 percent return. The said moves were correlated to the sentiment surrounding equity markets, which were more pronounced as the challenging situation takes hold.

The CC Euro High Income fund increased by 0.07 percent, more than the general market with an outperformance of circa 32bps for the month. On a year-to-date basis, the fund is slightly underperforming on a net basis due to the lower beta of the portfolio and the subsequent market recovery; albeit the volatility of the fund has been markedly lower than average. Throughout the month, the Manager continued to adjust the portfolio into attractive undervalued credit stories, primarily within the AT1 space.

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.

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)*

33.1%

*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 (%): 3.40
Underlying Yield (%): 4.63
Distribution: 31/03 and 30/09
Total Net Assets: € 40.23 mn
Month end NAV in EUR: 85.72
Number of Holdings: 93
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
% of Top 10 Holdings: 25.1

Performance To Date (EUR)

Top 10 Holdings

iShares Euro Corp Large Cap
4.0%
iShares Euro HY Corp
3.0%
2.25% Portugal Treasury 2034
2.7%
6.5% CMA CGM 2022
2.5%
5% Nidda BondCo 2025
2.4%
4% Chemours Co. 2026
2.4%
6% Loxam SAS 2025
2.1%
7.5% Garfunkelux 2022
2.0%
3.5% Eircom 2026
2.0%
5.25% HSBC perp.
1.8%

Major Sector Breakdown*

Asset 7
Communications
11.1%
Financials
10.1%
Government
7.1%
Consumer Discretionary
5.9%
Industrials
5.2%
Materials
5.0%
*excluding exposures to CIS

Maturity Buckets*

58.5%
0-5 Years
23.1%
5-10 Years
4.1%
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
15.6%
Malta
12.8%
Germany
11.7%
Brazil
9.3%
USA
5.9%
UK
4.9%
Spain
3.8%
Ireland
3.6%
Turkey
3.0%
Switzerland
2.8%
*including exposures to CIS

Asset Allocation

Cash 5.2%
Bonds 85.6%
CIS/ETFs 9.1%

Performance History (EUR)*

YTD

-4.14%

2019

7.47%

2018

-6.44%

2017

5.31%

2016

4.97%

Inception***

33.10%

*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 84.1%
USD 15.9%
Other 0.0%

Risk Statistics

Sharpe Ratio
-0.05 (3Y)
0.23 (5Y)
Std. Deviation
8.87% (3Y)
7.21% (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

    October 2020

    October saw a sharp decline in risk sentiment across financial markets from the post-Covid highs of late summer, as case counts rose to new highs across Europe and the US. Market performance remains inextricably correlated to the evolution of the virus, as it dictates the actions of governments worldwide.

    Up until October, better testing and tracing capacity had allowed European policymakers to treat this second wave with targeted measures, including travel restrictions or the requirement to wear a facemask in public, instead of national lockdowns. These measures however were deemed to be insufficient in the face of record-breaking virus cases, and more aggressive action was taken by most European governments, with the aim of possibly decreasing them in time for the Christmas period. Policymakers are relying on the arrival of a viable vaccine in the first half of 2021.

    With partial national shutdowns announced in the two largest European economies and further restrictions across the continent in the face of quickly rising Covid-19 cases, and similar reports across the Atlantic, most financial markets were significantly impacted, recording their worst performance since March.

    Expectedly, data is becoming a very sensitive element for market participants as it depicts the strength of the recovery, particularly in light of the announcements of further restrictions throughout the month. Economic data confirmed that the pace of recovery stalled over the summer and momentum remains tentative in Europe.

    Looking at Europe’s largest economy, Germany, PMIs indicated an expansion during the month of October, with Manufacturing PMI, increasing to 58.2, compared to a consensus estimate of 58.0, and a previous reading of 58.0. Services PMI was less impressive, coming in at 49.5, signaling a contraction, compared to 50.6 in the previous month. Meanwhile, the Euro Area’s Manufacturing PMI indicated an expansion to 54.8, slightly above expectations, while services PMI deteriorated further to 46.9 from a previous reading of 48.0. Output has shown signs of recovery, but remained well-below pre-pandemic levels, with significant divergence form the largest economies.

    Furthermore, both lagging and leading indicators showed some weakness with unemployment within the Eurozone area inching upwards to 8.3% on a revised estimate. Moreover, consumer confidence remained stagnant, with readings coming in at -15.5. Collectively, despite some positive signs, indicators are suggesting that we are still at the very beginning of a fragile economic recovery.

    Looking at sovereign yields on the 10-year German Bund, Europe’s most sought benchmark closed tighter than the previous month at -0.625 compared to -0.521 at the end of last month, with most of the tightening occurring during the last week of October, in parallel with the new restrictions. The yield curve experienced a parallel shift downwards, in line with the increased volatility in the marketplace during October. These moves were also experienced in European peripheral sovereigns.

    October saw the most issuance in speculative grade bonds in Europe since July. There is just not enough supply to satiate demand and the recent European Union SURE deal has been a good illustration. There is still a lot of cash in the market to be invested, which should act as a strong bid for credit as an asset class.

    Within the HY asset space, risk assets remained under pressure, closing off the month of October with a negative 0.27 percent return. The said moves were correlated to the sentiment surrounding equity markets, which were more pronounced as the challenging situation takes hold.

    The CC Euro High Income fund increased by 0.07 percent, more than the general market with an outperformance of circa 32bps for the month. On a year-to-date basis, the fund is slightly underperforming on a net basis due to the lower beta of the portfolio and the subsequent market recovery; albeit the volatility of the fund has been markedly lower than average. Throughout the month, the Manager continued to adjust the portfolio into attractive undervalued credit stories, primarily within the AT1 space.

    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.

  • 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)*

    33.1%

    *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 (%): 3.40
    Underlying Yield (%): 4.63
    Distribution: 31/03 and 30/09
    Total Net Assets: € 40.23 mn
    Month end NAV in EUR: 85.72
    Number of Holdings: 93
    Auditors: Deloitte Malta
    Legal Advisor: Ganado Advocates
    Custodian: Sparkasse Bank Malta p.l.c.
    % of Top 10 Holdings: 25.1

    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
    4.0%
    iShares Euro HY Corp
    3.0%
    2.25% Portugal Treasury 2034
    2.7%
    6.5% CMA CGM 2022
    2.5%
    5% Nidda BondCo 2025
    2.4%
    4% Chemours Co. 2026
    2.4%
    6% Loxam SAS 2025
    2.1%
    7.5% Garfunkelux 2022
    2.0%
    3.5% Eircom 2026
    2.0%
    5.25% HSBC perp.
    1.8%

    Top Holdings by Country*

    France
    15.6%
    Malta
    12.8%
    Germany
    11.7%
    Brazil
    9.3%
    USA
    5.9%
    UK
    4.9%
    Spain
    3.8%
    Ireland
    3.6%
    Turkey
    3.0%
    Switzerland
    2.8%
    *including exposures to CIS

    Major Sector Breakdown*

    Asset 7
    Communications
    11.1%
    Financials
    10.1%
    Government
    7.1%
    Consumer Discretionary
    5.9%
    Industrials
    5.2%
    Materials
    5.0%
    *excluding exposures to CIS

    Asset Allocation

    Cash 5.2%
    Bonds 85.6%
    CIS/ETFs 9.1%

    Maturity Buckets*

    58.5%
    0-5 Years
    23.1%
    5-10 Years
    4.1%
    10 Years+
    *based on the Next Call Date

    Performance History (EUR)*

    YTD

    -4.14%

    2019

    7.47%

    2018

    -6.44%

    2017

    5.31%

    2016

    4.97%

    Inception***

    33.10%

    *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 84.1%
    USD 15.9%
    Other 0.0%

    Risk Statistics

    Sharpe Ratio
    -0.05 (3Y)
    0.23 (5Y)
    Std. Deviation
    8.87% (3Y)
    7.21% (5Y)
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