Investment Objectives
The Fund aims to maximise the total level of return through investment, in a diversified portfolio of Emerging Market Corporate and Government fixed income securities as well as up to 15% of the Net Assets of the Sub-Fund in Emerging Marketequities. In pursuing this objective, the Investment Manager shall invest primarily in a diversified portfolio of Emerging Market 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-Emerging Market issuers.
The Fund is actively managed, not managed by reference to any index.
Investor Profile
A typical investor in the 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 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 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
Key Facts & Performance
Fund Manager
Jordan Portelli
Jordan is CIO at CC Finance Group. He has extensive experience in research and portfolio management with various institutions. Today he is responsible of the group’s investment strategy and manages credit and multi-asset strategies.
PRICE (EUR)
€
ASSET CLASS
Bonds
MIN. INITIAL INVESTMENT
€100000
FUND TYPE
UCITS
BASE CURRENCY
EUR
5 year performance*
0%
*View Performance History below
Inception Date: 01 Feb 2020
ISIN: MT7000026456
Bloomberg Ticker: CCEMBFF MV
Distribution Yield (%): 4.75%
Underlying Yield (%): 5.90%
Distribution: 31/03 and 30/09
Total Net Assets: $9.8 mn
Month end NAV in EUR: 61.27
Number of Holdings: 48
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
Performance To Date (EUR)
Top 10 Holdings
6.9%
4.1%
4.0%
4.0%
3.9%
3.8%
3.5%
3.0%
2.9%
2.7%
Major Sector Breakdown*
Government
17.1%
Materials
10.0%
Financials
7.3%
Funds
6.9%
Consumer Staples
6.0%
Consumer Discretionary
4.4%
Maturity Buckets*
Credit Ratings
Risk & Reward Profile
Lower Risk
Potentialy Lower Reward
Higher Risk
Potentialy Higher Reward
Top Holdings by Country*
15.1%
13.9%
10.8%
6.3%
6.2%
5.8%
4.0%
3.8%
3.7%
3.5%
Asset Allocation
Performance History (EUR)*
1 Year
2.39%
3 Year
-16.64%
Currency Allocation
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 Corporate and Government fixed income securities as well as up to 15% of the Net Assets of the Sub-Fund in Emerging Marketequities. In pursuing this objective, the Investment Manager shall invest primarily in a diversified portfolio of Emerging Market 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-Emerging Market issuers.
The Fund is actively managed, not managed by reference to any index.
-
Investor profile
A typical investor in the 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 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
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
February 2024
Introduction
Following a period of underperformance, emerging markets begun to exhibit signs of recovery, as evidenced by positive performance in the final months of 2023 that has extended into the new year. February sustained such positive progress, amid a mixed and challenged performance observed across credit markets at large.
From an economic perspective, Emerging markets exhibited a disparity in performance. India, for instance showcased positive growth indicators, potentially reflecting ongoing structural reforms and a resilient domestic demand. However, others, such as Brazil, remained mired in inflation and currency depreciation. This unevenness underscores the inherent diversity within the EM classification, where individual economies grapple with unique challenges and opportunities.
From a performance standpoint, emerging market corporate credit posted gains (c. 0.98%), outperforming its developed market counterparts.
Market environment and performance
China’s macroeconomy exhibited tentative signs of recovery in February. The Consumer Price Index (CPI) rose by 0.7% year-on-year, indicating a potential uptick in domestic demand, which aligns with a consistent trend observed since December 2023. This positive development is further bolstered by growth in import figures for the first two months of the year. However, a comprehensive assessment of the first quarter’s performance awaits further data. While some analysts project a possibility of exceeding growth expectations based on February’s indicators, significant headwinds remain. The property sector’s decline continues unabated, and debt accumulation presents a persistent risk factor. In conclusion, February appears to be a continuation of China’s uneven economic trajectory in 2023. Although nascent signs of improvement are present, structural challenges demand continued monitoring and strategic policy interventions.
As conferred, India’s economic performance exhibited continued expansion, albeit with tentative signs of moderation. The services sector, a crucial engine of the economy, remained robust, although growth slowed slightly compared to January. Meanwhile, manufacturing noted the fastest growth in the factory activity since last September, as sales rose owing to a remarkable expansion in new export orders. Albeit the composite reading suggesting a potential easing in the growth trajectory, global rating agency Moody’s revised India’s 2024 GDP forecast upwards to 6.8%, citing the robust performance of the previous quarter and a more favourable global economic outlook. This upward revision underscores the underlying strength of the Indian economy.
In Latin America, Brazil’s Central Bank upped its 2024 GDP growth forecast again, to 1.8%, indicating a cautiously optimistic outlook. However, consumer confidence dipped, potentially dampening spending. While activity remained stable – yet revolving in expansionary territory -, February highlighted the need to address consumer sentiment for Brazil’s economic recovery to gain stronger momentum. Mexico, too exhibited signs of economic progress, with despite a challenging global environment characterized by tightening financial conditions and heightened uncertainty. The OECD’s Economic Survey for Mexico highlighted this strength, notably Mexico’s robust fiscal management. For 2024, President López Obrador forecasted a 3.5% economic growth, suggesting optimism about the country’s economic trajectory.
Fund performance
In February, the CC Emerging Market Bond Fund realized a gain of 0.22%, supporting the fund’s outperformance against its benchmark. Throughout the month, the Manager largely maintained its portfolio allocation, with the fund’s only move targeted to increase the portfolio’s duration through an ETF. Indeed, the decisions previously taken to increase the fund’s exposure to sovereigns and quasi-sovereigns, notably to Brazil and Mexico amongst other, have continued to pay dividends.
Market and investment outlook
The recent rally in emerging markets sustained in February amid ongoing optimism about the Federal Reserve (Fed) potentially cutting interest rates in the middle of the year and a rebound in China, which was underpinned by better-than-expected activity data and a cut to one of its key mortgage policy rates. Within the EM space, high-yield debt outperformed their higher rated peers as investors continued to seek higher returns amidst rising interest rates.
While February presented some positive developments in Emerging Markets, rising interest rates, currency fluctuations, and China’s yet indefinite recovery pose ongoing challenges. Asia’s economic powerhouse economic recovery, while showing benevolent signs, requires further consolidation. China’s economic agenda for 2024, unveiled at a recent National People’s Congress, prioritizes balanced growth within a global environment of uncertainty. Key objectives include maintaining a stable GDP growth rate of around 5%, fostering economic security by creating over 12 million new urban jobs, controlling inflation through a 3% consumer inflation target, and keeping unemployment low at approximately 5.5%.
With respect to the Emerging Market Bond Fund, the manager will continue to assess the market landscape and capitalize on appealing credit opportunities. Consistent with recent actions, the manager will continue to tailor the portfolio to match prevailing yield conditions while increasing the portfolio’s overall duration. Optimism for the year ahead remains on the back of continued rate cut expectations.
-
Key facts & performance
Fund Manager
Jordan Portelli
Jordan is CIO at CC Finance Group. He has extensive experience in research and portfolio management with various institutions. Today he is responsible of the group’s investment strategy and manages credit and multi-asset strategies.
PRICE (EUR)
€
ASSET CLASS
Bonds
MIN. INITIAL INVESTMENT
€100000
FUND TYPE
UCITS
BASE CURRENCY
EUR
5 year performance*
0%
*View Performance History below
Inception Date: 01 Feb 2020
ISIN: MT7000026456
Bloomberg Ticker: CCEMBFF MV
Distribution Yield (%): 4.75%
Underlying Yield (%): 5.90%
Distribution: 31/03 and 30/09
Total Net Assets: $9.8 mn
Month end NAV in EUR: 61.27
Number of Holdings: 48
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
Performance To Date (EUR)
Risk & Reward Profile
1234567Lower Risk
Potentialy Lower Reward
Higher Risk
Potentialy Higher Reward
Top 10 Holdings
iShares JPM USD EM Bond6.9%
5.8% Oryx Funding Ltd 20314.1%
6.625% NBM US Holdings Inc 20294.0%
5.8% Turkcell 20284.0%
4.375% Freeport McMoran Inc 20283.9%
4% HSBC Holdings plc perp3.8%
4.75% Banco Santander SA perp3.5%
5.60% Petrobras Global Finance 20313.0%
iShares JPM USD EM Corp Bond2.9%
3.25% Export-Import BK India 20302.7%
Top Holdings by Country*
United States15.1%
Brazil13.9%
Mexico10.8%
India6.3%
Oman6.2%
Turkey5.8%
Malta (incl. cash)4.0%
United Kingdom3.8%
Indonesia3.7%
Spain3.5%
*including exposures to CISMajor Sector Breakdown*
Government
17.1%
Materials
10.0%
Financials
7.3%
Funds
6.9%
Consumer Staples
6.0%
Consumer Discretionary
4.4%
*excluding exposures to CISAsset Allocation
Cash 4.0%Bonds (incl. ETFs) 96.0%Maturity Buckets*
39.8%0-5 Years37.9%5-10 Years8.5%10 Years+*based on the Next Call DatePerformance History (EUR)*
1 Year
2.39%
3 Year
-16.64%
* The EUR Distributor Share Class (Class F) was launched on 06 February 2020.** Performance figures are calculated using the Value Added Monthly Index "VAMI" principle. The VAMI calculates the total return gained by an investor fromreinvestment of any dividends and additional interest gained through compounding.*** 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 96.7%Euro 3.3% -
Downloads
Commentary
February 2024
Introduction
Following a period of underperformance, emerging markets begun to exhibit signs of recovery, as evidenced by positive performance in the final months of 2023 that has extended into the new year. February sustained such positive progress, amid a mixed and challenged performance observed across credit markets at large.
From an economic perspective, Emerging markets exhibited a disparity in performance. India, for instance showcased positive growth indicators, potentially reflecting ongoing structural reforms and a resilient domestic demand. However, others, such as Brazil, remained mired in inflation and currency depreciation. This unevenness underscores the inherent diversity within the EM classification, where individual economies grapple with unique challenges and opportunities.
From a performance standpoint, emerging market corporate credit posted gains (c. 0.98%), outperforming its developed market counterparts.
Market environment and performance
China’s macroeconomy exhibited tentative signs of recovery in February. The Consumer Price Index (CPI) rose by 0.7% year-on-year, indicating a potential uptick in domestic demand, which aligns with a consistent trend observed since December 2023. This positive development is further bolstered by growth in import figures for the first two months of the year. However, a comprehensive assessment of the first quarter’s performance awaits further data. While some analysts project a possibility of exceeding growth expectations based on February’s indicators, significant headwinds remain. The property sector’s decline continues unabated, and debt accumulation presents a persistent risk factor. In conclusion, February appears to be a continuation of China’s uneven economic trajectory in 2023. Although nascent signs of improvement are present, structural challenges demand continued monitoring and strategic policy interventions.
As conferred, India’s economic performance exhibited continued expansion, albeit with tentative signs of moderation. The services sector, a crucial engine of the economy, remained robust, although growth slowed slightly compared to January. Meanwhile, manufacturing noted the fastest growth in the factory activity since last September, as sales rose owing to a remarkable expansion in new export orders. Albeit the composite reading suggesting a potential easing in the growth trajectory, global rating agency Moody’s revised India’s 2024 GDP forecast upwards to 6.8%, citing the robust performance of the previous quarter and a more favourable global economic outlook. This upward revision underscores the underlying strength of the Indian economy.
In Latin America, Brazil’s Central Bank upped its 2024 GDP growth forecast again, to 1.8%, indicating a cautiously optimistic outlook. However, consumer confidence dipped, potentially dampening spending. While activity remained stable – yet revolving in expansionary territory -, February highlighted the need to address consumer sentiment for Brazil’s economic recovery to gain stronger momentum. Mexico, too exhibited signs of economic progress, with despite a challenging global environment characterized by tightening financial conditions and heightened uncertainty. The OECD’s Economic Survey for Mexico highlighted this strength, notably Mexico’s robust fiscal management. For 2024, President López Obrador forecasted a 3.5% economic growth, suggesting optimism about the country’s economic trajectory.
Fund performance
In February, the CC Emerging Market Bond Fund realized a gain of 0.22%, supporting the fund’s outperformance against its benchmark. Throughout the month, the Manager largely maintained its portfolio allocation, with the fund’s only move targeted to increase the portfolio’s duration through an ETF. Indeed, the decisions previously taken to increase the fund’s exposure to sovereigns and quasi-sovereigns, notably to Brazil and Mexico amongst other, have continued to pay dividends.
Market and investment outlook
The recent rally in emerging markets sustained in February amid ongoing optimism about the Federal Reserve (Fed) potentially cutting interest rates in the middle of the year and a rebound in China, which was underpinned by better-than-expected activity data and a cut to one of its key mortgage policy rates. Within the EM space, high-yield debt outperformed their higher rated peers as investors continued to seek higher returns amidst rising interest rates.
While February presented some positive developments in Emerging Markets, rising interest rates, currency fluctuations, and China’s yet indefinite recovery pose ongoing challenges. Asia’s economic powerhouse economic recovery, while showing benevolent signs, requires further consolidation. China’s economic agenda for 2024, unveiled at a recent National People’s Congress, prioritizes balanced growth within a global environment of uncertainty. Key objectives include maintaining a stable GDP growth rate of around 5%, fostering economic security by creating over 12 million new urban jobs, controlling inflation through a 3% consumer inflation target, and keeping unemployment low at approximately 5.5%.
With respect to the Emerging Market Bond Fund, the manager will continue to assess the market landscape and capitalize on appealing credit opportunities. Consistent with recent actions, the manager will continue to tailor the portfolio to match prevailing yield conditions while increasing the portfolio’s overall duration. Optimism for the year ahead remains on the back of continued rate cut expectations.