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 (%): 5.10%
Underlying Yield (%): 5.61%
Distribution: 31/03 and 30/09
Total Net Assets: $9.8 mn
Month end NAV in EUR: 61.73
Number of Holdings: 50
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
Performance To Date (EUR)
Top 10 Holdings
6.2%
4.1%
4.1%
4.0%
4.0%
3.8%
3.0%
2.9%
2.8%
2.5%
Major Sector Breakdown*
Government
19.6%
Materials
8.3%
Communications
8.0%
Materials
7.9%
Consumer Staples
6.1%
Utilites
4.1%
Maturity Buckets*
Credit Ratings
Risk & Reward Profile
Lower Risk
Potentialy Lower Reward
Higher Risk
Potentialy Higher Reward
Top Holdings by Country*
14.2%
10.9%
10.0%
8.0%
6.6%
6.3%
6.0%
5.9%
4.0%
3.8%
Asset Allocation
Performance History (EUR)*
1 Year
8.63%
3 Year
-16.67%
Currency Allocation
Interested in this product?
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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.
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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
August 2024
Introduction
Emerging market (EM) credit extended on the notable run witnessed since the start of the year. The asset class has since delivered positive returns across the board, driven by both price appreciation and income generation. Indeed, the carry in hard currency issues was a key driver, providing valuable protection against an overall rise in US Treasury yields. Whilst acting as a buffer, the reliable income stream made EM debt an attractive proposition.
Such extended run was observed despite sharp declines at the start of the month on the back of disappointing US economic data and a surprise interest rate hike by the Bank of Japan triggered a flight to safety. However, as the month progressed, optimism about potential Federal Reserve interest rate cuts were helpful for EM returns, as was a weaker US dollar which provided a tailwind for the region.
In numbers, EM corporate credit returned c. 9.89% year-to-date, with income return contributing around 4.76%. August alone saw a total return of c. 1.58%.
Market environment and performance
China’s economy, despite intermittent signs of recovery, remains heavily conditioned by negative sentiment surrounding the real estate market. The government’s response has thus far proved insufficient, with a recent 10-basis point cut to the one-year loan prime rate falling short of expectations and failing to revive sentiment.
The country’s remaining growth engines too are faltering, underscoring the urgent need for more substantial government intervention to achieve the increasingly unlikely growth target. With GDP growth forecasts now below the People’s Bank of China’s 5.0% target, expectations for stimulus are rising. Indeed, there is an urgent need for China to enhance policy support and ensure the effective implementation of earlier policies
China’s General Composite PMI stood at 51.2 in August 2024, unchanged from July’s 9-month low. Still, it was the tenth straight month of growth in private sector activity, with faster manufacturing output growth offsetting slower services activity expansion. Likewise, for new orders, a renewed improvement in the manufacturing sector contrasted with a slower increase in services new business, though overall growth picked up pace. Meanwhile, employment levels fell despite rising backlogged orders. On prices, input cost inflation rose slightly, but increased competition resulted in selling prices falling the most since January. Charges declined across both manufacturing and service sectors. Looking ahead, confidence strengthened. In August, China’s annual inflation rate climbed to 0.6% from 0.5% in July, falling short of market forecasts of 0.7%. It was also the seventh straight month of consumer inflation.
India continues to demonstrate remarkable resilience, with economic activity remaining robust for a 37th consecutive month, August’s Composite PMI reading showed. Service providers signalled the strongest rise in business activity since March while goods producers posted the weakest expansion in production for seven months. New orders rose substantially, though at the slowest pace since May, as the service sector posted a quicker increase but manufacturing saw a slowdown.
Latin America continues to present a nuanced economic picture, with Inflation, previously exhibiting continued signs of cooling, resurging, somewhat limiting the scope for further monetary easing. Despite such challenges, upward growth revisions in Brazil, Chile, and Mexico, coupled with attractive investment opportunities and improved corporate performance, are fuelling optimism about the region’s long-term prospects.
Fund performance
In August, the CC Emerging Market Bond Fund realized a gain of 1.48%. Throughout the month, the Manager maintained its allocation, following strategic adjustments made in the prior period.
Market and investment outlook
Looking ahead, the evolving global interest rate environment, particularly decisions by the Fed, will be crucial to monitor. Indeed, a dovish stance will prove beneficial, potentially translating into a weaker US dollar. On the contrary, a hawkish Fed stance (now seemingly fading) may lead to a sustained period of higher rates globally. A “higher-for-longer” dollar scenario indeed presents a challenge for EM economies, notably; reduced fund flows from foreign investors seeking higher returns elsewhere, and increased refinancing costs for companies with large foreign currency debt burdens.
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. This, whilst keeping a close eye on the political landscape within Emerging Markets and possible escalation of geopolitical tensions, which to-date have alas endured. With rate cut expectations now increasing over the year, optimism remains.
-
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 (%): 5.10%
Underlying Yield (%): 5.61%
Distribution: 31/03 and 30/09
Total Net Assets: $9.8 mn
Month end NAV in EUR: 61.73
Number of Holdings: 50
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 Bond6.2%
5.8% Oryx Funding Ltd 20314.1%
6.625% NBM US Holdings Inc 20294.1%
5.8% Turkcell 20284.0%
4% HSBC Holdings plc perp4.0%
4.75% Banco Santander SA perp3.8%
5.60% Petrobras Global Finance 20313.0%
iShares JPM USD EM Corp Bond2.9%
3.25% Export-Import BK India 20302.8%
3.625% Nemak SAB DE CV 20312.5%
Top Holdings by Country*
Brazil14.2%
Mexico10.9%
United States10.0%
Malta (Incl. cash)8.0%
India6.6%
Oman6.3%
Turkey6.0%
Indonesia5.9%
United Kingdom4.0%
Spain3.8%
*including exposures to CISMajor Sector Breakdown*
Government
19.6%
Materials
8.3%
Communications
8.0%
Materials
7.9%
Consumer Staples
6.1%
Utilites
4.1%
*excluding exposures to CISAsset Allocation
Cash 3.3%Bonds (incl. ETFs) 96.7%Maturity Buckets*
41.7%0-5 Years35.6%5-10 Years10.4%10 Years+*based on the Next Call DatePerformance History (EUR)*
1 Year
8.63%
3 Year
-16.67%
* 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 98.9%Euro 1.1% -
Downloads
Commentary
August 2024
Introduction
Emerging market (EM) credit extended on the notable run witnessed since the start of the year. The asset class has since delivered positive returns across the board, driven by both price appreciation and income generation. Indeed, the carry in hard currency issues was a key driver, providing valuable protection against an overall rise in US Treasury yields. Whilst acting as a buffer, the reliable income stream made EM debt an attractive proposition.
Such extended run was observed despite sharp declines at the start of the month on the back of disappointing US economic data and a surprise interest rate hike by the Bank of Japan triggered a flight to safety. However, as the month progressed, optimism about potential Federal Reserve interest rate cuts were helpful for EM returns, as was a weaker US dollar which provided a tailwind for the region.
In numbers, EM corporate credit returned c. 9.89% year-to-date, with income return contributing around 4.76%. August alone saw a total return of c. 1.58%.
Market environment and performance
China’s economy, despite intermittent signs of recovery, remains heavily conditioned by negative sentiment surrounding the real estate market. The government’s response has thus far proved insufficient, with a recent 10-basis point cut to the one-year loan prime rate falling short of expectations and failing to revive sentiment.
The country’s remaining growth engines too are faltering, underscoring the urgent need for more substantial government intervention to achieve the increasingly unlikely growth target. With GDP growth forecasts now below the People’s Bank of China’s 5.0% target, expectations for stimulus are rising. Indeed, there is an urgent need for China to enhance policy support and ensure the effective implementation of earlier policies
China’s General Composite PMI stood at 51.2 in August 2024, unchanged from July’s 9-month low. Still, it was the tenth straight month of growth in private sector activity, with faster manufacturing output growth offsetting slower services activity expansion. Likewise, for new orders, a renewed improvement in the manufacturing sector contrasted with a slower increase in services new business, though overall growth picked up pace. Meanwhile, employment levels fell despite rising backlogged orders. On prices, input cost inflation rose slightly, but increased competition resulted in selling prices falling the most since January. Charges declined across both manufacturing and service sectors. Looking ahead, confidence strengthened. In August, China’s annual inflation rate climbed to 0.6% from 0.5% in July, falling short of market forecasts of 0.7%. It was also the seventh straight month of consumer inflation.
India continues to demonstrate remarkable resilience, with economic activity remaining robust for a 37th consecutive month, August’s Composite PMI reading showed. Service providers signalled the strongest rise in business activity since March while goods producers posted the weakest expansion in production for seven months. New orders rose substantially, though at the slowest pace since May, as the service sector posted a quicker increase but manufacturing saw a slowdown.
Latin America continues to present a nuanced economic picture, with Inflation, previously exhibiting continued signs of cooling, resurging, somewhat limiting the scope for further monetary easing. Despite such challenges, upward growth revisions in Brazil, Chile, and Mexico, coupled with attractive investment opportunities and improved corporate performance, are fuelling optimism about the region’s long-term prospects.
Fund performance
In August, the CC Emerging Market Bond Fund realized a gain of 1.48%. Throughout the month, the Manager maintained its allocation, following strategic adjustments made in the prior period.
Market and investment outlook
Looking ahead, the evolving global interest rate environment, particularly decisions by the Fed, will be crucial to monitor. Indeed, a dovish stance will prove beneficial, potentially translating into a weaker US dollar. On the contrary, a hawkish Fed stance (now seemingly fading) may lead to a sustained period of higher rates globally. A “higher-for-longer” dollar scenario indeed presents a challenge for EM economies, notably; reduced fund flows from foreign investors seeking higher returns elsewhere, and increased refinancing costs for companies with large foreign currency debt burdens.
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. This, whilst keeping a close eye on the political landscape within Emerging Markets and possible escalation of geopolitical tensions, which to-date have alas endured. With rate cut expectations now increasing over the year, optimism remains.