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

August 2020

The Global Opportunities fund was up 3.66% for the month of August and down 1.85% for the year. This performance is a result of the prudent stance of the Manager to invest in stocks, which continue to do well in uncertain times whilst also slowly building a position in those stocks in beaten down industries a longer-term view on their valuations.

At the start of the summer, when lockdowns were gradually lifted, some hoped that the Covid-19 pandemic would recede during the hotter summer months. However, even though record temperatures were registered in August, the virus has unfortunately continued to spread.

Even though the number of new daily cases in the US has started to decline, some regions- including Europe-are now facing a second wave. So far, better testing and tracing capacity has allowed European policymakers to treat this second wave with targeted measures, including travel restrictions or the requirement to wear a face mask in public, instead of national lockdowns.

On the economic front, high-frequency data, such as travel and navigation app usage, point to continued global growth over the third quarter, albeit at a more moderate pace, particularly in the US, than in May and June. However, these challenges haven’t dented investors’ enthusiasm, which seems to have been lifted by a better-than-expected second-quarter earnings season and by the potential for a viable Covid-19 vaccine in the coming months.

In this context, risk assets continued to rally. Over the month, the MSCI Emerging Markets Index rose by 2.2% and the MSCI Developed Market Index rose by 6.7%.

The swift and sizeable Covid-19 policy response from central banks and governments has managed to cushion the economic shock and lift markets, as policymakers aimed to build a bridge to the other side of the virus. However, the second wave in Europe reminds us that the battle is far from over and until a vaccine is widely available, economies will likely remain constrained by measures aimed at slowing the spread of the virus. It is therefore important that governments continue to support consumer incomes and businesses until a vaccine is available or until the virus is brought under control by other means. The extent to which they do so will be key to the outlook from here.

Given the high degree of uncertainty around the outlook for the virus and a vaccine the Investment Manager continues to believe it makes sense to aim for a defensive portfolio taking up selective positions in cyclical stocks with long term value. In this environment, the Investment Manager favours an up-in-quality approach across for stocks with a focus on valuations relative to fundamentals.