Investment Objectives

The Euro High Income Bond Fund Class G (Distribution) Investor Shares in GBP aims to aims to maximise the total level of return for
investors by investing, mainly, in a diversified portfolio of bonds and other similar debt securities.

Investor Profile

A typical investor in the Euro High Income Bond Fund Class G (Distribution) Investor Shares in GBP 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 Euro 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

October 2021

Consequent to an increased level of money supply through unprecedented monetary stimulus, an uptick in inflation was theoretically warranted. Thus far, current inflation levels proved to be supply rather than consumer driven, and to this extent this tends to trigger more uncertainty on the next moves monetary politicians should take. Whether such price increases are transitory or else persistent, however, is yet an outcome ought to be determined.

The sustainability of inflationary pressures has in October continued to be quite a debate. Largely, investors are of the view that temporary price pressures could well be embedded in more long-term expectations and last even as the growth from reopening fades away. A surge in energy prices, due to an increase in both demand and limited capacity, have made matters worse, amplifying fears around longer-lasting inflationary pressures.

Theoretically, sustainability in price increases is maintained through a continuous rise in demand, and not through overall price rises resultant to a higher cost of production. Supply bottlenecks – in our view the key source to inflationary pressures, is a phenomenon we’ve been witnessing in 2021. Disruptions worsened by a second coronavirus wave, a blockage in the Suez Canal earlier in March, port closures in China, and capacity limitations, are seemingly persisting. Supply issues along with increased demand for goods, led to higher input costs, which were ultimately translated onto customers.

In the month, inflationary pressures have led markets to price in a faster pace of policy tightening from central banks across the world. Notably, the U.S. 10-year benchmark Treasury yield hit a high of 1.7 per cent over the month of October. Larger increases in shorter-dated yields caused interest rate curves to flatten.

From an economic viewpoint, the path towards a full recovery has all-in-all proved bumpier than previously anticipated. A vaccination drive taking long to pick-up speed along with a more severe wave of infections, lessened the pace of the recovery, giving rise to doubts about the sustainability of economic growth. Economic data is now showing stronger signs. Albeit earlier witnessing a slight deceleration in the pace of expansion, data points are seemingly maintaining the recent pace. Leading economic indicators continue to revolve in expansionary territory while inflation data remains on an upward trajectory.

Business activity in the Euro economic area, previously witnessing a strong recovery momentum and reaching its peak in July, continued to moderate, as October’s Composite PMI data – a useful gauge of economic health in the two key sectors, appears to have just past the peak rate of growth. Supply issues are said to have been a major headwind to businesses.

In October, Eurozone Composite PMI was revised slightly lower to 54.2 from a preliminary estimate of 54.3 and lower than the previous month’s reading of 56.2. Although revolving in expansionary territory, October’s reading maintained its recent downward trend, pointing to the slowest growth in private sector activity in six months.

A slowdown in economic activity was evident in Europe’s largest economy, Germany. Albeit still reporting strong PMI data, revolving in expansionary territory, activity in both manufacturing and services saw declines. In September, manufacturing PMI was revised slightly lower to 57.8 from a preliminary of 58.2, pointing to the slowest growth in factory activity in 9 months amid continued supply disruptions. Services PMI stood at 52.4, down from September’s 56.2. October’s reading pointed to the slowest growth in the services sector in 6 months, as the pace of economic recovery lost further momentum. Business confidence in the services segment remained strong and even showed a slight improvement, aiding job creation.

Eurozone inflation was estimated at 4.1 per cent in October 2021, higher than September’s actual 3.4 per cent and above economist expectations of 3.7 per cent. October’s flash reading is the highest since July 2008, further raising concerns about the ECB’s narrative that recent price spikes are seen as temporary and that the economy requires low borrowing costs. Month-on-month, inflation increased by 0.8 per cent – the highest monthly rate since March 2021, preliminary estimates showed.

European sovereign yields have in October pointed higher, continuing to reverse some of the downward moves envisaged since the end of Q2 2021, as economic activity maintained its recent robust pace and European Central Bank (ECB) President Christine Lagarde failed to push back against hawkish market bets that were pricing in two rate hikes by the end of 2022. During the month, the single currency bloc continued to benefit from the release of pent-up demand, having come out of coronavirus-inflicted restrictions relatively late. Notably, yield of the 10-year German Bund, closed the month 9bps higher at -0.11 per cent from -0.2 per cent at the end of September. Bond yields of sovereigns within the bloc’s periphery – those which offer a premium over Germany’s negative yielding debt, rose at somewhat similar, yet higher pace. Italy’s and Spain’s 10-year sovereign yields rose 31bps and 15bps, respectively, over the month.

The governing council of the ECB held off making any significant moves in its policy meeting. The central bank left its key interest rate unchanged. In support of its two per cent inflation target and in line with its monetary policy strategy, the Governing Council expects interest rates to remain at their present or lower levels. Also, net asset purchases under the Pandemic Emergency Purchase Programme (PEPP) shall continue with a monthly pace of €20 billion for as long as necessary to reinforce the accommodative impact of its policy rates. Asset purchases shall come to an end shortly before the bank starts raising its key ECB interest rates.

The CC Euro High Income Bond Fund dropped by 0.74 per cent in October, in line with the widening in spreads within European high yield Throughout the month the Manager continued to seek pockets of value by looking into attractive credit stories. Notably, exposure to the gaming industry, now comprising of 6.10 per cent of the portfolio, was increased through Sazka group – the largest pan-European lottery operator with leading market positions in Austria, the Czech Republic, Greece and Cyprus.

Going forward the Managers believe that credit markets will continue to be aided by the support of primarily monetary politicians, creating a positive technical environment. In terms of bond picking, the Managers will continue to monitor the current environment and take opportunities in attractive credit stories which should continue to add value to the portfolio.

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 (GBP)

£

ASSET CLASS

Bonds

MIN. INITIAL INVESTMENT

£2000

FUND TYPE

UCITS

BASE CURRENCY

GBP

RETURN (SINCE INCEPTION)*

-0.88%

*View Performance History below
Inception Date: 14 May 2021
ISIN: MT7000030474
Bloomberg Ticker: CCHIBGG MV
Entry Charge: Up to 2.5%
Total Expense Ratio: 1.63%
Exit Charge: None
Distribution Yield (%): -
Underlying Yield (%): 4.39
Distribution: 31/03 and 30/09
Total Net Assets: € 45.17 mn
Month end NAV in GBP: 99.12
Number of Holdings: 78
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
% of Top 10 Holdings: 25.00

Performance To Date (GBP)

Top 10 Holdings

iShares Euro HY Corp
4.2%
iShares Fallen Angels HY Corp
3.4%
4.875% CPI Property Group perp
2.6%
4% Chemours Co 2026
2.3%
5% Nidda Bondco GMBH 2025
2.2%
2.5% Hapag Lloyd AG 2028
2.1%
5.25% HSBC Holdings plc perp
2.1%
4.625% Volkswagen perp
2.0%
6% Loxam Sas 2025
2.0%
4.25% Encore Capital Group 2028
2.0%

Major Sector Breakdown*

Financials
13.9%
Asset 7
Communications
11.0%
Funds
9.5%
Industrials
8.3%
Consumer Discretionary
6.1%
Consumer Discretionary
5.7%
*excluding exposures to CIS

Maturity Buckets*

70.8%
0-5 Years
11.5%
5-10 Years
2.5%
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
13.2%
Germany
11.5%
France
8.3%
Spain
6.9%
Luxembourg
4.7%
Czech Republic
4.7%
Italy
4.2%
United Kingdom
4.0%
Netherlands
3.9%
Malta
3.6%
*including exposures to CIS

Asset Allocation

Cash 5.7%
Bonds 84.8%
CIS/ETFs 9.5%

Performance History (EUR)*

YTD

-0.88%

2020

-%

2019

-%

1-month

-0.33%

3-month

-0.97%

Annualised Since Inception***

-2.77%

*Data in the chart does not include any dividends distributed since the Fund was launched on 1st September 2011.
**Performance figures are calculated using the Value Added Monthly Index "VAMI" principle. The VAMI calculates the total return gained by an investor from reinvestment of any dividends and additional interest gained through compounding
***The Distributor Share Class (Class D) was launched on 01 September 2011.

Currency Allocation

Euro 84.3%
USD 15.7%
Other 0.0%

Risk Statistics

Sharpe Ratio
0.28 (3Y)
0.31 (5Y)
Std. Deviation
8.83% (3Y)
7.01% (5Y)

Interested in this product?

  • Investment Objectives

    The Euro High Income Bond Fund Class G (Distribution) Investor Shares in GBP aims to aims to maximise the total level of return for
    investors by investing, mainly, in a diversified portfolio of bonds and other similar debt securities.

  • Investor profile

    A typical investor in the Euro High Income Bond Fund Class G (Distribution) Investor Shares in GBP 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

    October 2021

    Consequent to an increased level of money supply through unprecedented monetary stimulus, an uptick in inflation was theoretically warranted. Thus far, current inflation levels proved to be supply rather than consumer driven, and to this extent this tends to trigger more uncertainty on the next moves monetary politicians should take. Whether such price increases are transitory or else persistent, however, is yet an outcome ought to be determined.

    The sustainability of inflationary pressures has in October continued to be quite a debate. Largely, investors are of the view that temporary price pressures could well be embedded in more long-term expectations and last even as the growth from reopening fades away. A surge in energy prices, due to an increase in both demand and limited capacity, have made matters worse, amplifying fears around longer-lasting inflationary pressures.

    Theoretically, sustainability in price increases is maintained through a continuous rise in demand, and not through overall price rises resultant to a higher cost of production. Supply bottlenecks – in our view the key source to inflationary pressures, is a phenomenon we’ve been witnessing in 2021. Disruptions worsened by a second coronavirus wave, a blockage in the Suez Canal earlier in March, port closures in China, and capacity limitations, are seemingly persisting. Supply issues along with increased demand for goods, led to higher input costs, which were ultimately translated onto customers.

    In the month, inflationary pressures have led markets to price in a faster pace of policy tightening from central banks across the world. Notably, the U.S. 10-year benchmark Treasury yield hit a high of 1.7 per cent over the month of October. Larger increases in shorter-dated yields caused interest rate curves to flatten.

    From an economic viewpoint, the path towards a full recovery has all-in-all proved bumpier than previously anticipated. A vaccination drive taking long to pick-up speed along with a more severe wave of infections, lessened the pace of the recovery, giving rise to doubts about the sustainability of economic growth. Economic data is now showing stronger signs. Albeit earlier witnessing a slight deceleration in the pace of expansion, data points are seemingly maintaining the recent pace. Leading economic indicators continue to revolve in expansionary territory while inflation data remains on an upward trajectory.

    Business activity in the Euro economic area, previously witnessing a strong recovery momentum and reaching its peak in July, continued to moderate, as October’s Composite PMI data – a useful gauge of economic health in the two key sectors, appears to have just past the peak rate of growth. Supply issues are said to have been a major headwind to businesses.

    In October, Eurozone Composite PMI was revised slightly lower to 54.2 from a preliminary estimate of 54.3 and lower than the previous month’s reading of 56.2. Although revolving in expansionary territory, October’s reading maintained its recent downward trend, pointing to the slowest growth in private sector activity in six months.

    A slowdown in economic activity was evident in Europe’s largest economy, Germany. Albeit still reporting strong PMI data, revolving in expansionary territory, activity in both manufacturing and services saw declines. In September, manufacturing PMI was revised slightly lower to 57.8 from a preliminary of 58.2, pointing to the slowest growth in factory activity in 9 months amid continued supply disruptions. Services PMI stood at 52.4, down from September’s 56.2. October’s reading pointed to the slowest growth in the services sector in 6 months, as the pace of economic recovery lost further momentum. Business confidence in the services segment remained strong and even showed a slight improvement, aiding job creation.

    Eurozone inflation was estimated at 4.1 per cent in October 2021, higher than September’s actual 3.4 per cent and above economist expectations of 3.7 per cent. October’s flash reading is the highest since July 2008, further raising concerns about the ECB’s narrative that recent price spikes are seen as temporary and that the economy requires low borrowing costs. Month-on-month, inflation increased by 0.8 per cent – the highest monthly rate since March 2021, preliminary estimates showed.

    European sovereign yields have in October pointed higher, continuing to reverse some of the downward moves envisaged since the end of Q2 2021, as economic activity maintained its recent robust pace and European Central Bank (ECB) President Christine Lagarde failed to push back against hawkish market bets that were pricing in two rate hikes by the end of 2022. During the month, the single currency bloc continued to benefit from the release of pent-up demand, having come out of coronavirus-inflicted restrictions relatively late. Notably, yield of the 10-year German Bund, closed the month 9bps higher at -0.11 per cent from -0.2 per cent at the end of September. Bond yields of sovereigns within the bloc’s periphery – those which offer a premium over Germany’s negative yielding debt, rose at somewhat similar, yet higher pace. Italy’s and Spain’s 10-year sovereign yields rose 31bps and 15bps, respectively, over the month.

    The governing council of the ECB held off making any significant moves in its policy meeting. The central bank left its key interest rate unchanged. In support of its two per cent inflation target and in line with its monetary policy strategy, the Governing Council expects interest rates to remain at their present or lower levels. Also, net asset purchases under the Pandemic Emergency Purchase Programme (PEPP) shall continue with a monthly pace of €20 billion for as long as necessary to reinforce the accommodative impact of its policy rates. Asset purchases shall come to an end shortly before the bank starts raising its key ECB interest rates.

    The CC Euro High Income Bond Fund dropped by 0.74 per cent in October, in line with the widening in spreads within European high yield Throughout the month the Manager continued to seek pockets of value by looking into attractive credit stories. Notably, exposure to the gaming industry, now comprising of 6.10 per cent of the portfolio, was increased through Sazka group – the largest pan-European lottery operator with leading market positions in Austria, the Czech Republic, Greece and Cyprus.

    Going forward the Managers believe that credit markets will continue to be aided by the support of primarily monetary politicians, creating a positive technical environment. In terms of bond picking, the Managers will continue to monitor the current environment and take opportunities in attractive credit stories which should continue to add value to the portfolio.

  • 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 (GBP)

    £

    ASSET CLASS

    Bonds

    MIN. INITIAL INVESTMENT

    £2000

    FUND TYPE

    UCITS

    BASE CURRENCY

    GBP

    RETURN (SINCE INCEPTION)*

    -0.88%

    *View Performance History below
    Inception Date: 14 May 2021
    ISIN: MT7000030474
    Bloomberg Ticker: CCHIBGG MV
    Entry Charge: Up to 2.5%
    Total Expense Ratio: 1.63%
    Exit Charge: None
    Distribution Yield (%): -
    Underlying Yield (%): 4.39
    Distribution: 31/03 and 30/09
    Total Net Assets: € 45.17 mn
    Month end NAV in GBP: 99.12
    Number of Holdings: 78
    Auditors: Deloitte Malta
    Legal Advisor: Ganado Advocates
    Custodian: Sparkasse Bank Malta p.l.c.
    % of Top 10 Holdings: 25.00

    Performance To Date (GBP)

    Risk & Reward Profile

    1
    2
    3
    4
    5
    6
    7
    Lower Risk

    Potentialy Lower Reward

    Higher Risk

    Potentialy Higher Reward

    Top 10 Holdings

    iShares Euro HY Corp
    4.2%
    iShares Fallen Angels HY Corp
    3.4%
    4.875% CPI Property Group perp
    2.6%
    4% Chemours Co 2026
    2.3%
    5% Nidda Bondco GMBH 2025
    2.2%
    2.5% Hapag Lloyd AG 2028
    2.1%
    5.25% HSBC Holdings plc perp
    2.1%
    4.625% Volkswagen perp
    2.0%
    6% Loxam Sas 2025
    2.0%
    4.25% Encore Capital Group 2028
    2.0%

    Top Holdings by Country*

    United States
    13.2%
    Germany
    11.5%
    France
    8.3%
    Spain
    6.9%
    Luxembourg
    4.7%
    Czech Republic
    4.7%
    Italy
    4.2%
    United Kingdom
    4.0%
    Netherlands
    3.9%
    Malta
    3.6%
    *including exposures to CIS

    Major Sector Breakdown*

    Financials
    13.9%
    Asset 7
    Communications
    11.0%
    Funds
    9.5%
    Industrials
    8.3%
    Consumer Discretionary
    6.1%
    Consumer Discretionary
    5.7%
    *excluding exposures to CIS

    Asset Allocation

    Cash 5.7%
    Bonds 84.8%
    CIS/ETFs 9.5%

    Maturity Buckets*

    70.8%
    0-5 Years
    11.5%
    5-10 Years
    2.5%
    10 Years+
    *based on the Next Call Date

    Performance History (EUR)*

    YTD

    -0.88%

    2020

    -%

    2019

    -%

    1-month

    -0.33%

    3-month

    -0.97%

    Annualised Since Inception***

    -2.77%

    *Data in the chart does not include any dividends distributed since the Fund was launched on 1st September 2011.
    **Performance figures are calculated using the Value Added Monthly Index "VAMI" principle. The VAMI calculates the total return gained by an investor from reinvestment of any dividends and additional interest gained through compounding
    ***The Distributor Share Class (Class D) was launched on 01 September 2011.

    Credit Ratings*

    Average Credit Rating: BB-
    *excluding exposures to CIS

    Currency Allocation

    Euro 84.3%
    USD 15.7%
    Other 0.0%

    Risk Statistics

    Sharpe Ratio
    0.28 (3Y)
    0.31 (5Y)
    Std. Deviation
    8.83% (3Y)
    7.01% (5Y)
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