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 Class B (Dist) Investor Shares in USD 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

June 2022

Introduction
Market concerns, mainly; lingering key macro-economic risks worsened from the conflicts in Ukraine, monetary policy tightening as central banks continue to grapple with soaring inflation, and a zero-tolerance coronavirus policy leading to stringent restrictions in China – threatening demand and sustaining supply-chain related disruptions, have in June continued to pose as a block to a shift in sentiment. A risk-off mode persisted, with a negative credit market performance proving widespread.

European and U.S. corporate credit headed substantially lower as sovereign yields continued to price in further increases in interest rates, on top of what has already been announced as central bankers maintained their hawkish tone, despite acknowledging the present risks to growth outlook. Indeed, recession fears increased, notably due to the pressures exerted upon consumers through rising price pressures and higher borrowing costs.

Market environment and performance
Forward looking indicators, namely PMIs painted a somewhat gloomy picture as manufacturing and services, albeit revised higher from initial estimates, noted a sharp deterioration in the rate of growth, increasing the risk of the region slipping into an economic decline in the upcoming third-quarter. Manufacturing fell to 52.1 from 54.6 in May, pointing to the slowest growth in factory activity since August 2020, as production levels, new business intakes and export orders saw declines. Similarly, services signalled the weakest growth since January due to a weaker uplift in new business to services firms. Inflationary pressures, albeit showing signs that prices may have possibly peaked, remained. In June, annual inflation rate increased to a new record high of 8.6% as prices continued to accelerate for energy and food prices. Core inflation, which excludes transitory or temporary price volatility, edged lower to 3.7%.

Aggregate business activity in the US pointed to a softer expansion across the private sector. Notably, composite PMI reading in June fell to a five-month low of 51.2 from 53.6 in the previous month amid a slower service sector output growth and the slowest growth in factory activity since July of 2020. Annual inflation rate in the US unexpectedly accelerated to 9.1% in June, from 8.6 per cent in the previous month as energy and food inflation persisted. Core inflation, which excludes transitory or temporary price volatility, slowed to 5.9% from 6.0% per cent a month earlier.

Notwithstanding a dramatic decline in consumer confidence and worsening economic conditions, market participants have over the month continued to price in multiple rate rises from the European Central Bank (ECB). European sovereign yields, adjusting to such ideology and the ECB’s rhetoric, headed north. The upward yield moves, notably the acceleration of the German Bund led to a continued spread widening between the latter and yields of sovereigns within the bloc’s periphery, notably Italy’s, doubling from 1 to 2% in recent weeks. In response, the ECB is expected to unveil its new tool, meant to avert market fragmentation – thus counter any unwarranted sell-off in a country’s bonds – while delivering its desired monetary policy across the single-currency bloc.

Meanwhile, the Fed has over the month affirmed its commitment to bring inflation under control with Fed member’s now largely expecting to have to raise interest rates to 3.8% by 2023 to combat inflation. Such communication and a 75bps hike, 25bps higher than the expected 50bps, led to significant widening, with the benchmark 10-year reaching highs of almost 3.5% mid-month. Fears that policy tightening may well tip the US economy into a recession drove the yield of the 10-year US Treasury note towards the 3% mark as investors piled into safe-haven assets.

With mounting concerns over the economic outlook, high yield credit was in the month particularly hard hit. Global high yield corporate credit, for the sixth-month running saw total negative returns, a 6.73% drop. In H1, total negative returns summed to 15.07%.

Fund performance
In the month of June, the CC High Income Bond Fund lost 5.29%, 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 a low portfolio duration, this to reduce the funds sensitivity to changes in interest rates. In line with this thinking, the fund reduced its exposure to a perpetual note issued by Intesa Sanpaolo. Meanwhile, the fund opened an exposure to the healthcare segment through Japanese multinational pharmaceutical company Takeda pharmaceutical.

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, substantially altering benchmark yields which currently revolve at notable highs despite somewhat retreating from highs witnessed mid-month as recessionary fears intensified. Such upward shift in yields, particularly at the longer-end of the yield curve – influenced by market participants – have on a year-to-date basis weighed on the performance of credit markets.

A prudent approach to tackling price pressures is more-than-ever imperative not to hinder growth, and thus worsen the economic situation. A geographical distinction must be made, with the U.S. in a notably better economic prospect, aided by the possible continued consumer spending.

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 continued widening in corporate credit spreads indeed pose an opportunity, presenting attractive entry points, yielding capital appreciation. That being said, a cautious approach is as things stand warranted.  

A quick introduction to our High Income Bond Fund

Watch Video

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 (USD)

$

ASSET CLASS

Bonds

MIN. INITIAL INVESTMENT

$2500

FUND TYPE

UCITS

BASE CURRENCY

USD

RETURN (SINCE INCEPTION)*

-4.49%

*View Performance History below
Inception Date: 21 May 2022
ISIN: MT7000030920
Bloomberg Ticker: CCHIBNC MV
Entry Charge: Up to 2.5%
Total Expense Ratio: 1.49%
Exit Charge: None
Distribution Yield (%): 2.75
Underlying Yield (%): 5.16
Distribution: 31/03 & 30/09
Total Net Assets: 51.94 mn
Month end NAV in USD: 72.94
Number of Holdings: 124
Auditors: Deloitte Malta
Legal Advisor: Ganado & Associates
Custodian: Sparkasse Bank Malta p.l.c.
% of Top 10 Holdings: 19.9

Performance To Date (USD)

Top 10 Holdings

iShares USD High Yield Corp Distr
2.7%
iShares Fallen Angels HY Corp
2.4%
iShares Euro HY Corp
2.4%
4% JP Morgan Chase & Co perp
2.3%
Lyxor ESG Euro HY
1.9%
5.25% HSBC Holdings plc perp
1.7%
5.299% Petrobras Global Fin 2025
1.7%
5% Tendam Brands SAU 2024
1.7%
4.25% Encore Capital Group Inc 2028
1.6%
2.5% Hapag-Lloyd AG 2028
1.5%

Major Sector Breakdown*

Funds
9.6%
Asset 7
Communications
9.2%
Industrials
5.8%
Materials
4.4%
Consumer Discretionary
4.3%
Health Care
3.8%
*excluding exposures to CIS

Maturity Buckets*

70.1%
0-5 Years
7.8%
5-10 Years
2.1%
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*

France
7.9%
Germany
7.9%
Spain
6.0%
Brazil
5.6%
Netherlands
4.0%
Malta
3.3%
Turkey
2.8%
Italy
2.4%
Ireland
2.4%
Mexico
1.4%
*including exposures to CIS

Asset Allocation

Cash 10.5%
Bonds 80.0%
CIS/ETFs 9.6%

Performance History (EUR)*

YTD

-13.9%

2021

1.48%

2020

-0.15%

2019

7.47%

2018

-6.44%

Annualised Since Inception***

1.79%

* The chart data and performance history show the simlated performance for the new share class C (Distributor), based on the performance of the share class D (Distributor) of the High Income Bond Fund which was launched on 0 September 2011. The investment objectives and policies and also the Risk and Reward Profile of both share classes are substantially similar.
** 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.
*** 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 63.1%
USD 36.9%
Other 0.0%

Risk Statistics

Sharpe Ratio
-0.45 (3Y)
-0.336 (5Y)
Std. Deviation
8.94% (3Y)
7.18% (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 Class B (Dist) Investor Shares in USD 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

    June 2022

    Introduction
    Market concerns, mainly; lingering key macro-economic risks worsened from the conflicts in Ukraine, monetary policy tightening as central banks continue to grapple with soaring inflation, and a zero-tolerance coronavirus policy leading to stringent restrictions in China – threatening demand and sustaining supply-chain related disruptions, have in June continued to pose as a block to a shift in sentiment. A risk-off mode persisted, with a negative credit market performance proving widespread.

    European and U.S. corporate credit headed substantially lower as sovereign yields continued to price in further increases in interest rates, on top of what has already been announced as central bankers maintained their hawkish tone, despite acknowledging the present risks to growth outlook. Indeed, recession fears increased, notably due to the pressures exerted upon consumers through rising price pressures and higher borrowing costs.

    Market environment and performance
    Forward looking indicators, namely PMIs painted a somewhat gloomy picture as manufacturing and services, albeit revised higher from initial estimates, noted a sharp deterioration in the rate of growth, increasing the risk of the region slipping into an economic decline in the upcoming third-quarter. Manufacturing fell to 52.1 from 54.6 in May, pointing to the slowest growth in factory activity since August 2020, as production levels, new business intakes and export orders saw declines. Similarly, services signalled the weakest growth since January due to a weaker uplift in new business to services firms. Inflationary pressures, albeit showing signs that prices may have possibly peaked, remained. In June, annual inflation rate increased to a new record high of 8.6% as prices continued to accelerate for energy and food prices. Core inflation, which excludes transitory or temporary price volatility, edged lower to 3.7%.

    Aggregate business activity in the US pointed to a softer expansion across the private sector. Notably, composite PMI reading in June fell to a five-month low of 51.2 from 53.6 in the previous month amid a slower service sector output growth and the slowest growth in factory activity since July of 2020. Annual inflation rate in the US unexpectedly accelerated to 9.1% in June, from 8.6 per cent in the previous month as energy and food inflation persisted. Core inflation, which excludes transitory or temporary price volatility, slowed to 5.9% from 6.0% per cent a month earlier.

    Notwithstanding a dramatic decline in consumer confidence and worsening economic conditions, market participants have over the month continued to price in multiple rate rises from the European Central Bank (ECB). European sovereign yields, adjusting to such ideology and the ECB’s rhetoric, headed north. The upward yield moves, notably the acceleration of the German Bund led to a continued spread widening between the latter and yields of sovereigns within the bloc’s periphery, notably Italy’s, doubling from 1 to 2% in recent weeks. In response, the ECB is expected to unveil its new tool, meant to avert market fragmentation – thus counter any unwarranted sell-off in a country’s bonds – while delivering its desired monetary policy across the single-currency bloc.

    Meanwhile, the Fed has over the month affirmed its commitment to bring inflation under control with Fed member’s now largely expecting to have to raise interest rates to 3.8% by 2023 to combat inflation. Such communication and a 75bps hike, 25bps higher than the expected 50bps, led to significant widening, with the benchmark 10-year reaching highs of almost 3.5% mid-month. Fears that policy tightening may well tip the US economy into a recession drove the yield of the 10-year US Treasury note towards the 3% mark as investors piled into safe-haven assets.

    With mounting concerns over the economic outlook, high yield credit was in the month particularly hard hit. Global high yield corporate credit, for the sixth-month running saw total negative returns, a 6.73% drop. In H1, total negative returns summed to 15.07%.

    Fund performance
    In the month of June, the CC High Income Bond Fund lost 5.29%, 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 a low portfolio duration, this to reduce the funds sensitivity to changes in interest rates. In line with this thinking, the fund reduced its exposure to a perpetual note issued by Intesa Sanpaolo. Meanwhile, the fund opened an exposure to the healthcare segment through Japanese multinational pharmaceutical company Takeda pharmaceutical.

    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, substantially altering benchmark yields which currently revolve at notable highs despite somewhat retreating from highs witnessed mid-month as recessionary fears intensified. Such upward shift in yields, particularly at the longer-end of the yield curve – influenced by market participants – have on a year-to-date basis weighed on the performance of credit markets.

    A prudent approach to tackling price pressures is more-than-ever imperative not to hinder growth, and thus worsen the economic situation. A geographical distinction must be made, with the U.S. in a notably better economic prospect, aided by the possible continued consumer spending.

    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 continued widening in corporate credit spreads indeed pose an opportunity, presenting attractive entry points, yielding capital appreciation. That being said, a cautious approach is as things stand warranted.  

  • 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 (USD)

    $

    ASSET CLASS

    Bonds

    MIN. INITIAL INVESTMENT

    $2500

    FUND TYPE

    UCITS

    BASE CURRENCY

    USD

    RETURN (SINCE INCEPTION)*

    -4.49%

    *View Performance History below
    Inception Date: 21 May 2022
    ISIN: MT7000030920
    Bloomberg Ticker: CCHIBNC MV
    Entry Charge: Up to 2.5%
    Total Expense Ratio: 1.49%
    Exit Charge: None
    Distribution Yield (%): 2.75
    Underlying Yield (%): 5.16
    Distribution: 31/03 & 30/09
    Total Net Assets: 51.94 mn
    Month end NAV in USD: 72.94
    Number of Holdings: 124
    Auditors: Deloitte Malta
    Legal Advisor: Ganado & Associates
    Custodian: Sparkasse Bank Malta p.l.c.
    % of Top 10 Holdings: 19.9

    Performance To Date (USD)

    Risk & Reward Profile

    1
    2
    3
    4
    5
    6
    7
    Lower Risk

    Potentialy Lower Reward

    Higher Risk

    Potentialy Higher Reward

    Top 10 Holdings

    iShares USD High Yield Corp Distr
    2.7%
    iShares Fallen Angels HY Corp
    2.4%
    iShares Euro HY Corp
    2.4%
    4% JP Morgan Chase & Co perp
    2.3%
    Lyxor ESG Euro HY
    1.9%
    5.25% HSBC Holdings plc perp
    1.7%
    5.299% Petrobras Global Fin 2025
    1.7%
    5% Tendam Brands SAU 2024
    1.7%
    4.25% Encore Capital Group Inc 2028
    1.6%
    2.5% Hapag-Lloyd AG 2028
    1.5%

    Top Holdings by Country*

    France
    7.9%
    Germany
    7.9%
    Spain
    6.0%
    Brazil
    5.6%
    Netherlands
    4.0%
    Malta
    3.3%
    Turkey
    2.8%
    Italy
    2.4%
    Ireland
    2.4%
    Mexico
    1.4%
    *including exposures to CIS

    Major Sector Breakdown*

    Funds
    9.6%
    Asset 7
    Communications
    9.2%
    Industrials
    5.8%
    Materials
    4.4%
    Consumer Discretionary
    4.3%
    Health Care
    3.8%
    *excluding exposures to CIS

    Asset Allocation

    Cash 10.5%
    Bonds 80.0%
    CIS/ETFs 9.6%

    Maturity Buckets*

    70.1%
    0-5 Years
    7.8%
    5-10 Years
    2.1%
    10 Years+
    *based on the Next Call Date

    Performance History (EUR)*

    YTD

    -13.9%

    2021

    1.48%

    2020

    -0.15%

    2019

    7.47%

    2018

    -6.44%

    Annualised Since Inception***

    1.79%

    * The chart data and performance history show the simlated performance for the new share class C (Distributor), based on the performance of the share class D (Distributor) of the High Income Bond Fund which was launched on 0 September 2011. The investment objectives and policies and also the Risk and Reward Profile of both share classes are substantially similar.
    ** 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.
    *** 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 63.1%
    USD 36.9%
    Other 0.0%

    Risk Statistics

    Sharpe Ratio
    -0.45 (3Y)
    -0.336 (5Y)
    Std. Deviation
    8.94% (3Y)
    7.18% (5Y)
  • Downloads

Designed and Developed by