Investment Objectives

The Fund aims to maximise the total level of return through investment, in a diversified portfolio of Emerging Market (“EM”) Corporate and Government fixed income securities as well as up to 15% of the Net Assets of the Sub-Fund in EM equities. In pursuing this objective, the Investment Manager shall invest primarily in a diversified portfolio of EM bonds rated at the time of investment “BBB+” to “CCC+” by S&P, or in bonds determined to be of comparable quality. The Fund can also invest up to 10% of its assets in Non-Rated bond issues and up to 30% of its assets in Non-EM issuers.

The Fund is actively managed, not managed by reference to any index.

Investor Profile

A typical investor in the CC Emerging Market Bond Fund would be one who is seeking to gain exposure to the Emerging Bond Market via corporate and/or sovereign bonds whilst seeking to accumulate wealth and save over time in a product that re-invests coupons received on a gross basis. Furthermore, investors in the CC Emerging Market Bond Fund are those with a medium to high tolerance to risk and who are planning to hold on to their investment for the medium-to-long term so as to benefit from the compound interest effect whilst also participating in the interest rate cycle as well as the investment cycle commensurate with an investment in Emerging Markets.

Fund Rules at a Glance

The Investment Manager shall invest primarily but not solely in a diversified portfolio of Emerging Market Corporate fixed income securities and Emerging Market Government fixed income securities with maturities of 10 years or less, rated at the time of investment “Baa1” to “Caa1” by Moody’s or “BBB+” to “CCC+” by S&P, or in bonds determined to be of comparable quality by the Investment Manager. The Investment Manager may also invest up to 10% of the Net Assets of the Sub-Fund in unrated fixed income securities.

  • Minimum Credit Rating CCC+ (or equivalent)
  • Up to 10% in Non-Rated Bonds
  • Average Credit Quality of B- (or equivalent)
  • Emerging Market Issuers as per MSCI Emerging and Frontier
  • Up to 15% in Emerging Market Equities
  • Use of FDIs for hedging purposes only
  • No limit on exposure to CIS
  • Up to 30% in Non Emerging Market Issuers

Commentary

April 2022

Introduction
April, along the same route of the preceding three months and first quarter of the year proved negative for financial markets. Russia’s invasion in Ukraine, stringent Covid-19 policies in China once more prompting demand concerns and supply-chain disruptions, and expectations of a swift tightening in US monetary policy all weighed on sentiment. Credit markets came under pressure with investment grade and high-yield corporate credit delivering negative returns as treasury yields – pricing in the Fed’s hawkish stance – maintained the upward trajectory.

Market environment and performance
From the data front in the emerging market world, China’s manufacturing sector, for a second successive month and third since the start of the year, revolved in contractionary territory as coronavirus outbreaks and zero-tolerance policies took a toll on the economy. In figures, manufacturing PMI declined to 46.0 from 48.1 in March, missing market expectations of 47. Both output and new orders fell at the second steepest pace since the survey began in early 2004, while export orders shrank at the sharpest rate in nearly two years. Services, following six successive months of expansion, fell into contractionary territory. China’s services PMI plunged to 36.3 from 42.0 in March, reflecting coronavirus outbreaks and tight containment measures. The reading pointed to the sharpest fall in the sector since the onset of the pandemic in February 2020, with new orders and export sales shrinking.

In Brazil, private sector business activity has in April continued to witness a recovery amid a remarkable improvement in services, offsetting a slowdown in manufacturing. Services PMI, underpinned by solid increases in output and new business amid robust domestic demand, jumped to a record 60.6 in April, pointing to the fastest expansion on record. Meanwhile, manufacturing PMI fell to 51.8, from 52.3 in the previous month following a slower growth in production and new orders amid persistent supply bottlenecks. Growing uncertainty led to a faster drop in international sales.

Price pressures in EM markets persisted. In India, annual inflation rate increased to 7.79 per cent in April of 2022, the highest since October of 2020, and above market forecasts of 7.50 per cent. Meanwhile, Brazil’s annual inflation rate jumped to 12.13 per cent in April from 11.30 in the previous month, and slightly above market expectations of 12.07 per cent, marking the eighth consecutive month of double-digit inflation rates and the highest since October 2003.

In March EM high yield corporate credit extended on the downward trajectory witnessed in the previous months. During the period under review, the EM high yield names recorded a loss of 2.47 per cent.

Fund performance
In the month of April, the CC Emerging Market Bond Fund registered a loss of 3.27 per cent, in line with the spread widening witnessed in high yield corporate credit. Throughout the month the Manager continued to seek pockets of value by looking into attractive credit stories while maintaining adequate cash levels as yields continued to widen and keeping a low portfolio duration, this to reduce the funds sensitivity to changes in interest rates. During the month, the Manager closed two positions; ETFs, reducing the funds exposure to sovereigns.

Market and investment outlook
Consequent to political uncertainty in important regions, Russia-Ukraine tensions seemingly far from abating, and uncertainty in China surrounding the coronavirus pandemic and stringent curbs imposed, mitigating demand and giving rise to supply issues, EMs may in 2022 possibly continue to witness some volatility. That said, the Manager will continue to assess the emerging market space scenario even on the basis of further monetary policy actions taken by Central Banks, which seem to follow the Fed’s stance.

In terms of bond picking, the Manager will continue to monitor the current unprecedented environment and take opportunities in attractive credit stories which should continue to add value to the portfolio. The recent widening in corporate credit spreads may indeed pose an opportunity, presenting attractive entry points.

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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

€100000

FUND TYPE

UCITS

BASE CURRENCY

EUR

RETURN (SINCE INCEPTION)*

-18.12%

*View Performance History below
Inception Date: 01 Feb 2020
ISIN: MT7000026449
Bloomberg Ticker: CCEMBFE MV
Entry Charge: Up to 2.5%
Total Expense Ratio: 1.33%
Exit Charge: Up to 2.5%
Distribution Yield (%): N/A
Underlying Yield (%): 5.19
Distribution: N/A
Total Net Assets: $10.9 mn
Month end NAV in EUR: 79.68
Number of Holdings: 45
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
% of Top 10 Holdings: 33.6

Performance To Date (EUR)

Top 10 Holdings

6.625% NBM Holdings 2029
4.8%
5.8% Oryx Funding ltd 2031
3.7%
5.45% Cemex SAB DE CV 2029
3.6%
4.375% Freeport McMoran 2028
3.6%
4% HSBC Holdings plc perp
3.3%
5.8% Turkcell 2028
3.3%
4.75% Banco Santander SA perp
3.3%
5.299% Petrobras Global Fin 2025
2.9%
iShares JPM USD EM Bond
2.7%
3.25% Export-Import 2030
2.5%

Major Sector Breakdown*

Asset 7
Communications
9.9%
Materials
8.8%
Industrials
7.1%
Materials
5.9%
Real Estate
5.5%
Consumer Staples
4.8%
*excluding exposures to CIS

Maturity Buckets*

35.9%
0-5 Years
34.4%
5-10 Years
10.0%
10 Years+
*based on the Next Call Date

Credit Ratings

Average Credit Rating: BB-

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 (incl. Cash)
19.6%
Brazil
12.6%
Mexico
9.9%
United States
8.7%
India
8.3%
China
7.7%
Oman
5.6%
Turkey
5.1%
Russia
3.5%
Indonesia
3.4%
*including exposures to CIS

Asset Allocation

Cash 13.7%
Bonds (incl. ETFs) 86.3%

Performance History (EUR)*

YTD

-13.32%

2021

-0.94%

2020*

-3.48%

1-month

-3.22%

12-month

-13.80%

Annualised Since Inception***

-8.09%

* The EUR Accumulator Share Class (Class E) was launched on 06 February 2020.
** Returns quoted net of TER. Entry and exit charges may reduce returns for investors.
*** The Annualised rate is an indication of the average growth of the Fund over one year. The value of the investment and the income yield derived from the investment, if any, may go down as well as up and past performance is not necessarily indicative of future performance, nor a reliable guide to future performance. Hence returns may not be achieved and you may lose all or part of your investment in the Fund. Currency fluctuations may affect the value of investments and any derived income.

Currency Allocation

USD 97.0%
Euro 3.0%
Data for risk statistics is not available for this fund.

Interested in this product?

  • Investment Objectives

    The Fund aims to maximise the total level of return through investment, in a diversified portfolio of Emerging Market (“EM”) Corporate and Government fixed income securities as well as up to 15% of the Net Assets of the Sub-Fund in EM equities. In pursuing this objective, the Investment Manager shall invest primarily in a diversified portfolio of EM bonds rated at the time of investment “BBB+” to “CCC+” by S&P, or in bonds determined to be of comparable quality. The Fund can also invest up to 10% of its assets in Non-Rated bond issues and up to 30% of its assets in Non-EM issuers.

    The Fund is actively managed, not managed by reference to any index.

  • Investor profile

    A typical investor in the CC Emerging Market Bond Fund would be one who is seeking to gain exposure to the Emerging Bond Market via corporate and/or sovereign bonds whilst seeking to accumulate wealth and save over time in a product that re-invests coupons received on a gross basis. Furthermore, investors in the CC Emerging Market Bond Fund are those with a medium to high tolerance to risk and who are planning to hold on to their investment for the medium-to-long term so as to benefit from the compound interest effect whilst also participating in the interest rate cycle as well as the investment cycle commensurate with an investment in Emerging Markets.

    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

    • Minimum Credit Rating CCC+ (or equivalent)
    • Up to 10% in Non-Rated Bonds
    • Average Credit Quality of B- (or equivalent)
    • Emerging Market Issuers as per MSCI Emerging and Frontier
    • Up to 15% in Emerging Market Equities
    • Use of FDIs for hedging purposes only
    • No limit on exposure to CIS
    • Up to 30% in Non Emerging Market Issuers
  • Commentary

    April 2022

    Introduction
    April, along the same route of the preceding three months and first quarter of the year proved negative for financial markets. Russia’s invasion in Ukraine, stringent Covid-19 policies in China once more prompting demand concerns and supply-chain disruptions, and expectations of a swift tightening in US monetary policy all weighed on sentiment. Credit markets came under pressure with investment grade and high-yield corporate credit delivering negative returns as treasury yields – pricing in the Fed’s hawkish stance – maintained the upward trajectory.

    Market environment and performance
    From the data front in the emerging market world, China’s manufacturing sector, for a second successive month and third since the start of the year, revolved in contractionary territory as coronavirus outbreaks and zero-tolerance policies took a toll on the economy. In figures, manufacturing PMI declined to 46.0 from 48.1 in March, missing market expectations of 47. Both output and new orders fell at the second steepest pace since the survey began in early 2004, while export orders shrank at the sharpest rate in nearly two years. Services, following six successive months of expansion, fell into contractionary territory. China’s services PMI plunged to 36.3 from 42.0 in March, reflecting coronavirus outbreaks and tight containment measures. The reading pointed to the sharpest fall in the sector since the onset of the pandemic in February 2020, with new orders and export sales shrinking.

    In Brazil, private sector business activity has in April continued to witness a recovery amid a remarkable improvement in services, offsetting a slowdown in manufacturing. Services PMI, underpinned by solid increases in output and new business amid robust domestic demand, jumped to a record 60.6 in April, pointing to the fastest expansion on record. Meanwhile, manufacturing PMI fell to 51.8, from 52.3 in the previous month following a slower growth in production and new orders amid persistent supply bottlenecks. Growing uncertainty led to a faster drop in international sales.

    Price pressures in EM markets persisted. In India, annual inflation rate increased to 7.79 per cent in April of 2022, the highest since October of 2020, and above market forecasts of 7.50 per cent. Meanwhile, Brazil’s annual inflation rate jumped to 12.13 per cent in April from 11.30 in the previous month, and slightly above market expectations of 12.07 per cent, marking the eighth consecutive month of double-digit inflation rates and the highest since October 2003.

    In March EM high yield corporate credit extended on the downward trajectory witnessed in the previous months. During the period under review, the EM high yield names recorded a loss of 2.47 per cent.

    Fund performance
    In the month of April, the CC Emerging Market Bond Fund registered a loss of 3.27 per cent, in line with the spread widening witnessed in high yield corporate credit. Throughout the month the Manager continued to seek pockets of value by looking into attractive credit stories while maintaining adequate cash levels as yields continued to widen and keeping a low portfolio duration, this to reduce the funds sensitivity to changes in interest rates. During the month, the Manager closed two positions; ETFs, reducing the funds exposure to sovereigns.

    Market and investment outlook
    Consequent to political uncertainty in important regions, Russia-Ukraine tensions seemingly far from abating, and uncertainty in China surrounding the coronavirus pandemic and stringent curbs imposed, mitigating demand and giving rise to supply issues, EMs may in 2022 possibly continue to witness some volatility. That said, the Manager will continue to assess the emerging market space scenario even on the basis of further monetary policy actions taken by Central Banks, which seem to follow the Fed’s stance.

    In terms of bond picking, the Manager will continue to monitor the current unprecedented environment and take opportunities in attractive credit stories which should continue to add value to the portfolio. The recent widening in corporate credit spreads may indeed pose an opportunity, presenting attractive entry points.

  • 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

    €100000

    FUND TYPE

    UCITS

    BASE CURRENCY

    EUR

    RETURN (SINCE INCEPTION)*

    -18.12%

    *View Performance History below
    Inception Date: 01 Feb 2020
    ISIN: MT7000026449
    Bloomberg Ticker: CCEMBFE MV
    Entry Charge: Up to 2.5%
    Total Expense Ratio: 1.33%
    Exit Charge: Up to 2.5%
    Distribution Yield (%): N/A
    Underlying Yield (%): 5.19
    Distribution: N/A
    Total Net Assets: $10.9 mn
    Month end NAV in EUR: 79.68
    Number of Holdings: 45
    Auditors: Deloitte Malta
    Legal Advisor: Ganado Advocates
    Custodian: Sparkasse Bank Malta p.l.c.
    % of Top 10 Holdings: 33.6

    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

    6.625% NBM Holdings 2029
    4.8%
    5.8% Oryx Funding ltd 2031
    3.7%
    5.45% Cemex SAB DE CV 2029
    3.6%
    4.375% Freeport McMoran 2028
    3.6%
    4% HSBC Holdings plc perp
    3.3%
    5.8% Turkcell 2028
    3.3%
    4.75% Banco Santander SA perp
    3.3%
    5.299% Petrobras Global Fin 2025
    2.9%
    iShares JPM USD EM Bond
    2.7%
    3.25% Export-Import 2030
    2.5%

    Top Holdings by Country*

    Malta (incl. Cash)
    19.6%
    Brazil
    12.6%
    Mexico
    9.9%
    United States
    8.7%
    India
    8.3%
    China
    7.7%
    Oman
    5.6%
    Turkey
    5.1%
    Russia
    3.5%
    Indonesia
    3.4%
    *including exposures to CIS

    Major Sector Breakdown*

    Asset 7
    Communications
    9.9%
    Materials
    8.8%
    Industrials
    7.1%
    Materials
    5.9%
    Real Estate
    5.5%
    Consumer Staples
    4.8%
    *excluding exposures to CIS

    Asset Allocation

    Cash 13.7%
    Bonds (incl. ETFs) 86.3%

    Maturity Buckets*

    35.9%
    0-5 Years
    34.4%
    5-10 Years
    10.0%
    10 Years+
    *based on the Next Call Date

    Performance History (EUR)*

    YTD

    -13.32%

    2021

    -0.94%

    2020*

    -3.48%

    1-month

    -3.22%

    12-month

    -13.80%

    Annualised Since Inception***

    -8.09%

    * The EUR Accumulator Share Class (Class E) was launched on 06 February 2020.
    ** Returns quoted net of TER. Entry and exit charges may reduce returns for investors.
    *** The Annualised rate is an indication of the average growth of the Fund over one year. The value of the investment and the income yield derived from the investment, if any, may go down as well as up and past performance is not necessarily indicative of future performance, nor a reliable guide to future performance. Hence returns may not be achieved and you may lose all or part of your investment in the Fund. Currency fluctuations may affect the value of investments and any derived income.

    Credit Ratings

    Average Credit Rating: BB-

    Currency Allocation

    USD 97.0%
    Euro 3.0%
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