Investment Objectives

The Fund aims to maximise the total level of return for investors by investing, mainly in a diversified portfolio of bonds and other similar debt securities. In pursuing this objective, the Investment Manager shall invest primarily in a diversified portfolio of corporate & government bonds maturing in the medium term, with an average credit quality of “Ba3” by Moody’s or “BB-” by S&P, although individual bond holdings may have higher or lower ratings. The Fund can also invest up to 10% of its assets in Non-Rated bond issues.

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

Investor Profile

A typical investor in the CC High Income Bond Fund Accumulator 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 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

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. Also, the positive correlation to US paper led European sovereign yields higher.  

Market environment and performance
The eurozone economy advanced by 0.2 per cent on quarter in the first three months of 2022, the least since the bloc exited a recession last year and below market expectations of a 0.3 per cent growth. Growth readings in Spain and Germany of 0.3 and 0.2 per cent respectively more than offset a contraction in Italy. Meanwhile the French economy stalled.

Forward looking indicators, notably Purchasing Managers Index (PMI) data painted a somewhat mixed picture as services – benefiting from loosened coronavirus restrictions – expanded while manufacturing contracted. Owing to such uptick in services, which offset the slowdown across the manufacturing sector, remaining susceptible to supply constraints and a slowdown in growth for new orders, the Eurozone Composite PMI increased to 55.8 from the previous months reading of 54.9.

In April, energy and food prices continued to contribute to a rise in annual inflation – a fresh record high at 7.5 per cent, in-line with expectations and marginally higher than the previous month reading of 7.4 per cent. Core inflation, which excludes transitory or temporary price volatility, rose to 3.5 per cent – the highest since available records began in January of 1997. The rate of inflation remains well above the European Central Bank (ECB) target of 2.0 per cent. Month-on-month, inflation increased by 0.6 per cent.

European sovereign yields furthered on the strong upward trajectory witnessed in March, heading to the highest in years on expectations of more aggressive interest rate increases by major central banks in spite of worsening sentiment due to China’s strict coronavirus curbs. Also, ECB president Christine Lagarde repeated the message that asset purchases will end early in Q3 and rates could rise this year, but affirmed that the governing council will maintain “optionality”. Meanwhile, incumbent French President Macron was re-elected with over 58 per cent of the votes against rival Marine Le Pen.

The yield on the 10-year German Bund, closed the month at 0.94 per cent, 39bps higher than the previous month end.  Bond yields of sovereigns within the bloc’s periphery, those which offer a premium over Germany’s negative yielding debt, moved in tandem, albeit rising at somewhat faster pace.

While outperforming their US counterparts, European investment grade and high yield credit closed the month negative registering a 2.81 and 2.78 per cent loss, respectively.

Fund performance
In the month of March, the CC Euro High Income Bond Fund lost 2.40 per cent, in line with the widening in spreads within European 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 fund reduced its exposure to financials, namely Unicredit SpA, while opening a position in the British multinational chemicals company Ineos Group on attractive valuations.

Market and investment outlook
Going forward the Manager believes that credit markets will largely remain conditioned by monetary decisions taken, thus far proving more hawkish than the economic outlook possibly warrants, altering benchmark yields, now revolving at notable highs. Such upward shift in yields, particularly at the longer-end of the yield curve – influenced by market participants – weighed on the performance of credit markets which on a year-to-date basis stand substantially negative. A prudent approach to tackling price pressures in the Euro area is more-than-ever imperative not to hinder growth, and thus worsen the economic situation of the bloc.

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.

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

€100000

FUND TYPE

UCITS

BASE CURRENCY

EUR

RETURN (SINCE INCEPTION)*

6.28%

*View Performance History below
Inception Date: 24 Apr 2020
ISIN: MT7000026464
Bloomberg Ticker: CCHIBEE MV
Entry Charge: Up to 2.5%
Total Expense Ratio: 1.04%
Exit Charge: None
Distribution Yield (%): N/A
Underlying Yield (%): 4.53
Distribution:
Total Net Assets: € 41.04 mn
Month end NAV in EUR: 118.78
Number of Holdings: 79
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
% of Top 10 Holdings: 23.9

Performance To Date (EUR)

Top 10 Holdings

iShares Fallen Angels HY Corp
3.3%
iShares Euro High Yield Corp
3.2%
Lyxor ESG Euro High Yield
2.6%
4% Chemours Co 2026
2.3%
5% Tendam Brands SAU 2024
2.2%
5.25% HSBC Holdings plc perp
2.2%
4.25% Encore Capital Group 2028
2.2%
2.5% Hapag Lloyd AG 2028
2.0%
4% JP Morgan Chase & Co perp
1.9%
3.5% Eircom Finance DAC 2026
1.9%

Major Sector Breakdown*

Financials
12.1%
Asset 7
Communications
11.3%
Funds
9.4%
Industrials
7.3%
Consumer Discretionary
5.4%
Consumer Discretionary
4.9%
*excluding exposures to CIS

Maturity Buckets*

66.3%
0-5 Years
11.5%
5-10 Years
3.2%
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*

United States
12.1%
Germany
9.7%
France
9.1%
Spain
8.2%
Netherlands
5.5%
United Kingdom
4.2%
Malta
4.1%
Luxembourg
4.1%
Czech Republic
3.6%
Brazil
3.6%
*including exposures to CIS

Asset Allocation

Cash 9.6%
Bonds 81.0%
CIS/ETFs 1.2%

Performance History (EUR)*

YTD

-8.01%

2021

1.91%

2020*

13.37%

2019

-%

2018

-%

Annualised SinceInception*

3.07%

* The Accumulator Share Class (Class E) was launched on the 24th April 2020. 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.
**Returns quoted net of TER. Entry and exit charges may reduce returns for investors.

Currency Allocation

Euro 84.1%
USD 15.9%
Other 0.0%

Risk Statistics

Sharpe Ratio
(3Y)
(5Y)
Std. Deviation
(3Y)
(5Y)

Interested in this product?

  • Investment Objectives

    The Fund aims to maximise the total level of return for investors by investing, mainly in a diversified portfolio of bonds and other similar debt securities. In pursuing this objective, the Investment Manager shall invest primarily in a diversified portfolio of corporate & government bonds maturing in the medium term, with an average credit quality of “Ba3” by Moody’s or “BB-” by S&P, although individual bond holdings may have higher or lower ratings. The Fund can also invest up to 10% of its assets in Non-Rated bond issues.

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

  • Investor profile

    A typical investor in the CC High Income Bond Fund Accumulator 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

    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. Also, the positive correlation to US paper led European sovereign yields higher.  

    Market environment and performance
    The eurozone economy advanced by 0.2 per cent on quarter in the first three months of 2022, the least since the bloc exited a recession last year and below market expectations of a 0.3 per cent growth. Growth readings in Spain and Germany of 0.3 and 0.2 per cent respectively more than offset a contraction in Italy. Meanwhile the French economy stalled.

    Forward looking indicators, notably Purchasing Managers Index (PMI) data painted a somewhat mixed picture as services – benefiting from loosened coronavirus restrictions – expanded while manufacturing contracted. Owing to such uptick in services, which offset the slowdown across the manufacturing sector, remaining susceptible to supply constraints and a slowdown in growth for new orders, the Eurozone Composite PMI increased to 55.8 from the previous months reading of 54.9.

    In April, energy and food prices continued to contribute to a rise in annual inflation – a fresh record high at 7.5 per cent, in-line with expectations and marginally higher than the previous month reading of 7.4 per cent. Core inflation, which excludes transitory or temporary price volatility, rose to 3.5 per cent – the highest since available records began in January of 1997. The rate of inflation remains well above the European Central Bank (ECB) target of 2.0 per cent. Month-on-month, inflation increased by 0.6 per cent.

    European sovereign yields furthered on the strong upward trajectory witnessed in March, heading to the highest in years on expectations of more aggressive interest rate increases by major central banks in spite of worsening sentiment due to China’s strict coronavirus curbs. Also, ECB president Christine Lagarde repeated the message that asset purchases will end early in Q3 and rates could rise this year, but affirmed that the governing council will maintain “optionality”. Meanwhile, incumbent French President Macron was re-elected with over 58 per cent of the votes against rival Marine Le Pen.

    The yield on the 10-year German Bund, closed the month at 0.94 per cent, 39bps higher than the previous month end.  Bond yields of sovereigns within the bloc’s periphery, those which offer a premium over Germany’s negative yielding debt, moved in tandem, albeit rising at somewhat faster pace.

    While outperforming their US counterparts, European investment grade and high yield credit closed the month negative registering a 2.81 and 2.78 per cent loss, respectively.

    Fund performance
    In the month of March, the CC Euro High Income Bond Fund lost 2.40 per cent, in line with the widening in spreads within European 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 fund reduced its exposure to financials, namely Unicredit SpA, while opening a position in the British multinational chemicals company Ineos Group on attractive valuations.

    Market and investment outlook
    Going forward the Manager believes that credit markets will largely remain conditioned by monetary decisions taken, thus far proving more hawkish than the economic outlook possibly warrants, altering benchmark yields, now revolving at notable highs. Such upward shift in yields, particularly at the longer-end of the yield curve – influenced by market participants – weighed on the performance of credit markets which on a year-to-date basis stand substantially negative. A prudent approach to tackling price pressures in the Euro area is more-than-ever imperative not to hinder growth, and thus worsen the economic situation of the bloc.

    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)*

    6.28%

    *View Performance History below
    Inception Date: 24 Apr 2020
    ISIN: MT7000026464
    Bloomberg Ticker: CCHIBEE MV
    Entry Charge: Up to 2.5%
    Total Expense Ratio: 1.04%
    Exit Charge: None
    Distribution Yield (%): N/A
    Underlying Yield (%): 4.53
    Distribution:
    Total Net Assets: € 41.04 mn
    Month end NAV in EUR: 118.78
    Number of Holdings: 79
    Auditors: Deloitte Malta
    Legal Advisor: Ganado Advocates
    Custodian: Sparkasse Bank Malta p.l.c.
    % of Top 10 Holdings: 23.9

    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 Fallen Angels HY Corp
    3.3%
    iShares Euro High Yield Corp
    3.2%
    Lyxor ESG Euro High Yield
    2.6%
    4% Chemours Co 2026
    2.3%
    5% Tendam Brands SAU 2024
    2.2%
    5.25% HSBC Holdings plc perp
    2.2%
    4.25% Encore Capital Group 2028
    2.2%
    2.5% Hapag Lloyd AG 2028
    2.0%
    4% JP Morgan Chase & Co perp
    1.9%
    3.5% Eircom Finance DAC 2026
    1.9%

    Top Holdings by Country*

    United States
    12.1%
    Germany
    9.7%
    France
    9.1%
    Spain
    8.2%
    Netherlands
    5.5%
    United Kingdom
    4.2%
    Malta
    4.1%
    Luxembourg
    4.1%
    Czech Republic
    3.6%
    Brazil
    3.6%
    *including exposures to CIS

    Major Sector Breakdown*

    Financials
    12.1%
    Asset 7
    Communications
    11.3%
    Funds
    9.4%
    Industrials
    7.3%
    Consumer Discretionary
    5.4%
    Consumer Discretionary
    4.9%
    *excluding exposures to CIS

    Asset Allocation

    Cash 9.6%
    Bonds 81.0%
    CIS/ETFs 1.2%

    Maturity Buckets*

    66.3%
    0-5 Years
    11.5%
    5-10 Years
    3.2%
    10 Years+
    *based on the Next Call Date

    Performance History (EUR)*

    YTD

    -8.01%

    2021

    1.91%

    2020*

    13.37%

    2019

    -%

    2018

    -%

    Annualised SinceInception*

    3.07%

    * The Accumulator Share Class (Class E) was launched on the 24th April 2020. 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.
    **Returns quoted net of TER. Entry and exit charges may reduce returns for investors.

    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
    (3Y)
    (5Y)
    Std. Deviation
    (3Y)
    (5Y)
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