Global High Income Bond Fund Accumulator

The CC Global 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.

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

September 2019

In September investors were primarily focused on the Fed’s statement, rather than the rate cut, which was already being priced-in by market participants. As a matter of formality, the Fed cut the federal fund rate by 25bps sighting increased pressures on the macro-economic front. In its statement, the Fed sounded more dovish despite the fact that job gains remained solid, while the unemployment rate remained at low levels, however it sighted the weakness in business fixed investment and exports.

From the data front, the U.S. experienced weakness in both leading and lagging indicators – possibly a sign of coolness in the economy as the trade-war saga continues to put pressure on investors’ sentiment. In fact, the ISM non-manufacturing PMI slumped to 52.6, the lowest level since August 2016. Likewise, the ISM manufacturing PMI dropped to 47.8 levels, missing expectations of 50.1. This was the steepest contraction in the manufacturing sector since 2009. In addition, as sentiment continues to be damped by the trade-war saga, the ‘economic optimism index’ fell to 50.8, the lowest since February.

In the month of September, Global HY recorded a total return of +0.46 percent, with gains being solely locked from the carry trade, as investors continue to be wary of the geopolitical tensions which are also being reflected in economic data. Given that Global HY holds weighting in EM debt, the latter mitigated the downside experienced in U.S. HY.

The fund continues to outperform its internal benchmark with a monthly gain of +0.54 percent, while it continues to preserve its strong risk-adjusted metrics. Going forward, the Investment Manager will continue to manage its risk-adjusted metrics in line with the dynamic macro environment that is being negatively impacted by geopolitical tensions.