Global Opportunities Fund Institutional

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 funds
• The fund may not carry out uncovered sales (naked short-selling) of securities or other financial instruments

February 2021

The CC Global Opportunities was up 1.90% during the month of February. The ishares MSCI All World Index in EUR was up 2.80% over the same period.

Eurozone equities gained in February, supported by a strong advance for lowly-valued parts of the market such as banks. The energy sector also posted robust gains. Defensive sectors such as utilities and real estate were among the laggards. Eurozone annual inflation was confirmed at 0.9% for January and GDP was down by 0.6% in Q4 2020. The Italian parliament approved the formation of a new government to be led by former European Central Bank chairman Mario Draghi.

US equities survived a bout of turbulence to post gains in February. Fears that a rapid economic recovery would hasten policy tightening rattled bond markets before rippling into equities, especially tech. As the fears receded, markets recovered. Sectors that are most sensitive to the economic cycle – such as energy, financials, and industrials – performed strongly. More traditionally defensive sectors, such as utilities and consumer staples, lagged.

Emerging market (EM) equities recorded small gains. Early progress was driven by vaccine optimism and expectations for US fiscal stimulus, but were partly offset by concerns over stronger growth and higher inflation. A stronger dollar was also a headwind for EM. Argentina was the best-performing market in the EM index. Chile and Peru, aided by commodity price strength, and Greece, where hopes for a recovery in tourism picked up, all outperformed. Brazil was the weakest index market, negatively impacted by political concerns. China also closed in negative territory and underperformed the index, with weakness from internet and IT stocks dragging on performance.

In commodities, the S&P GSCI posted a robust return as the continued roll-out of Covid-19 vaccinations supported the outlook for a strong recovery in global growth. Energy was the best-performing index component as crude oil prices continued to pick up. The industrial metals component performed well, led by strong gains for copper, often viewed as bellwether for the global economy, and aluminium. The agriculture component achieved a modest gain in the month, boosted by higher coffee, sugar and cotton prices. The livestock component posted a moderate return, with a strong gain for live hogs. By contrast, the precious metals component registered a negative return in the month, with both gold and silver weaker.

After a strong run in risky assets followed by the recent pause for breath, staying cautiously optimistic seems sensible during this still challenging period of the pandemic. Nevertheless, more cyclical sectorial moves are imperative in return generation in the coming months. To this end, the Manager will continue to add exposures in sectors which should add alpha to the portfolio and which are aligned to the sectorial rotation view. Indeed, in the month of February, the Manager opened a position in United Airlines, in line with the proposition of seeing an increase in passenger movements as the vaccine roll-out continues its pace.