Investment Objectives

The Fund aims to achieve a combination of income, with the possibility of capital growth by investing in a diversified portfolio of collective investment schemes.

The Investment Manager will invest in collective investment schemes including UCITS, ETFs that invest in a broad range of assets, including debt and equity securities.

We aim to build a diversified portfolio spread across several industries and sectors. The Fund is actively managed, not managed by reference to any index.

Investor Profile

A typical investor in the Income Strategy Fund is:

  • Seeking to earn a high level of regular Income
  • Seeking an actively managed & diversified investment primarily in income-yielding funds 

Fund Rules

  1. The fund may invest up to 40% of its assets in CISs that are permitted to invest 65% or more of their assets in money market instruments.
  2. The fund may invest up to 30% of its assets in CISs that are permitted to invest 65% or more of their assets in investment-grade bonds.
  3. The fund may invest up to 100% of its assets in CISs that are permitted to invest 65% or more of their assets in high yield bonds.
  4. The fund may invest up to 20% of its assets in CISs that are permitted to invest 65% or more of their assets in equity securities.

Commentary

February 2024

Introduction

February ‘24 offered a stark illustration of the inherent duality within financial markets. While equity markets thrived, propelled by positive economic data and a shift in investor sentiment, credit markets were challenged, as such benevolent news, drove a shift in expectations for future interest rates. The contrasting performance highlighted the complex interplay of various factors that shape market movements.

Despite the seemingly benevolent news driving equity markets, the narrative in the credit markets turned sour as expectations for future interest rate cuts shifted. This anticipation of tighter monetary policy exerted downward pressure on bond prices, leading to their decline. Although high-yield bonds, particularly in Europe, offered some resistance to this trend, the broader fixed income market faced headwinds.

On the economic front, data released in February generally indicated sustained economic activity, bolstering investor confidence. Additionally, a continued decline in both headline and core inflation offered some welcome relief from inflationary concerns.

Market environment and performance

Europe’s economic landscape, following a challenging end to the prior year, vastly expected to close in a recessionary environment, proves mix, with activity showing signs of improvement and yet, weak growth prospects persisting. Consumer confidence, possibly due to households feeling optimistic about future wage growth and spending power, strengthened. Such optimism however wasn’t shared by businesses, with business sentiment across various sectors dipping in February, indicating a cautious outlook for the near future.

Indeed, the Euro area economy moved closer to stabilization in February, Purchasing Managers’ Index (PMI) survey showed, amid an expansion in services (reading 50.2 v a previous month reading of 48.4) which largely offset the weakening manufacturing segment (reading 46.5 v a previous month reading of 46.6). Inflows of new orders fell the least since June 2023, while the rate of employment growth was at a seven-month high. On the price front, input cost inflation hit a ten-month high, and output charges increased at the fastest pace since last May. Finally, business confidence improved for a fifth successive month.

Meanwhile, price pressures (as measured by the consumer price index) showed signs of peaking with inflation easing to 2.6% from 2.8% in January, but remained slightly above preliminary estimates of 2.5%, pushing back expectations of interest rate cuts by the ECB.

The U.S. economy continued to defy some earlier forecasts of a slowdown, displaying signs of continued strength. Consumer spending, business activity, and employment all indicated a healthy expansion to start the year. The labour market remained particularly robust, with the January jobs report, albeit revised lower in February, showing a significant increase in nonfarm payroll jobs and a near half-century low unemployment rate. Positive signs emerged on the inflation front as well. While not yet at the Federal Reserve’s target of 2%, inflation overall continued its downward trend compared to previous months. In February, Headline inflation edged up to 3.2%, higher than forecasts and previous month reading of 3.1%, despite energy prices softening. Core inflation, which excludes volatile items, rose 0.4% (more than expected and same as previous month) from January. Annually, it core prices eased to 3.8%. From the employment front, hiring surged by 275k, exceeding the downwardly revised January figure of 229k. The unemployment rate meanwhile increased to 3.9%; the highest level since January 2022 and surpassing market expectations of 3.7%. Wage growth edged higher, with average hourly earnings rising by 0.1%, below the 0.5% monthly gain observed in January and expectations of a 0.3% increase.

In February, Government bond yields rose, meaning prices fell as the market continued to anticipate interest rate cuts, although not immediately, as labour markets remained strong and inflation data surprised to the upside. Corporate credit, albeit mixed across rating buckets, outperformed. Investment grade ended the month lower, with European IG outperforming its US counterpart. High yield (+0.35%) – aided by the lower duration – was once again the standout performer, generating positive returns both relatively and on a total return basis. Additionally, the spread between high-yield and investment-grade yields narrowed slightly during the month, further supporting such outperformance.

Fund performance

Performance for the month of February proved positive, noting a 0.15% gain for the CC Income Strategy Fund, in-line with the positive performance across global high yield credit during such period.

Market and investment outlook

Hopes for a rapid end to interest rate hikes continued to fade in February as central bankers reiterated their commitment to data-driven policy decisions and emphasized the continued threat of inflation. Despite reaching peak levels and inflation sustaining a downward trend, Fed Chair Jerome Powell stated that rate cuts in March were unlikely. Similarly, while acknowledging progress in “disinflation,” ECB President Christine Lagarde stressed that discussions of easing policy were as yet premature. The key challenge for policy makers going forward is balancing continued high interest rates with supporting economic growth. The euro area, unlike its Western counterparts, faces an additional headwind whereby key economies, traditionally bolstering the single currency bloc, are now dragging down and offsetting the resilient growth observed in Southern European economies.

Fixed income, for years losing its appeal – given the relatively low-yielding environment – has become more attractive. Indeed, locking in coupons at such comparably favorable levels, ahead of any policy easing, is key.

That said, the manager will going forward continue to assess the market landscape and capitalize on appealing credit opportunities. Consistent with recent actions, the manager will continue to tailor the portfolio to match prevailing yield conditions while increasing the portfolio’s overall duration. Optimism for the year ahead remains on the back of continued rate cut expectations.

A quick introduction to our Global High Income Bond Fund

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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 (EUR)

ASSET CLASS

Mixed

MIN. INITIAL INVESTMENT

€5000

FUND TYPE

UCITS

BASE CURRENCY

EUR

5 year performance*

0%

*View Performance History below
Inception Date: 15 Sep 2021
ISIN: MT7000030680
Bloomberg Ticker: CCPISAE MV
Distribution Yield (%): 2.00
Underlying Yield (%): -
Distribution: 31/05 and 30/11
Total Net Assets: 6.59 mn
Month end NAV in EUR: 90.93
Number of Holdings: 13
Auditors: Deloitte Malta
Legal Advisor: GANADO Advocates
Custodian: Sparkasse Bank Malta p.l.c.

Performance To Date (EUR)

Top 10 Holdings

UBS (Lux) Bond Fund - Euro High Yield
19.8%
CC Funds SICAV plc - High Income Bond Fund
10.2%
Nordea 1 - European High Yield Bond Fund
8.8%
Robeco Capital Growth Funds - High Yield Bonds
8.7%
DWS Invest Euro High Yield Corp
7.9%
BlackRock Global High Yield Bond Fund
7.3%
Janus Henderson Horizon Global High Yield Bond Fund
7.0%
Schroder International Selection Fund Global High Yield
6.9%
AXA World Funds - Global High Yield Bonds
6.9%
Fidelity Funds - European High Yield Bond Fund
6.8%
Data for major sector breakdown is not available for this fund.
Data for maturity buckets is not available for this fund.
Data for credit ratings is not available for this fund.

Risk & Reward Profile

1
2
3
4
5
6
7
Lower Risk

Potentialy Lower Reward

Higher Risk

Potentialy Higher Reward

Top Holdings by Country

Europe
38.30%
Global
37.90%
International
22.50%

Asset Allocation

Fund 91.70%
ETF 7.00%
Cash 1.30%

Performance History (EUR)*

1Y

7.48%

3Y

-%

5Y

-%

* The Distributor Share Class (Class A) was launched on 15 September 2021.
** Performance figures are calculated using the Value Added Monthly Index "VAMI" principle. The VAMI calculates the total return gained by aninvestor from reinvestment of any dividends and additional interest gained through compounding.
*** The Distributor Share Class (Class A) was launched on 15 September 2021.
**** Returns quoted net of TER. Entry and exit charges may reduce returns for investors.

Currency Allocation

Euro 100.0%
USD 0.0%
GBP 0.0%
Data for risk statistics is not available for this fund.

Interested in this product?

  • Investment Objectives

    The Fund aims to achieve a combination of income, with the possibility of capital growth by investing in a diversified portfolio of collective investment schemes.

    The Investment Manager will invest in collective investment schemes including UCITS, ETFs that invest in a broad range of assets, including debt and equity securities.

    We aim to build a diversified portfolio spread across several industries and sectors. The Fund is actively managed, not managed by reference to any index.

  • Investor profile

    A typical investor in the Income Strategy Fund is:

    • Seeking to earn a high level of regular Income
    • Seeking an actively managed & diversified investment primarily in income-yielding funds 
    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

  • Commentary

    February 2024

    Introduction

    February ‘24 offered a stark illustration of the inherent duality within financial markets. While equity markets thrived, propelled by positive economic data and a shift in investor sentiment, credit markets were challenged, as such benevolent news, drove a shift in expectations for future interest rates. The contrasting performance highlighted the complex interplay of various factors that shape market movements.

    Despite the seemingly benevolent news driving equity markets, the narrative in the credit markets turned sour as expectations for future interest rate cuts shifted. This anticipation of tighter monetary policy exerted downward pressure on bond prices, leading to their decline. Although high-yield bonds, particularly in Europe, offered some resistance to this trend, the broader fixed income market faced headwinds.

    On the economic front, data released in February generally indicated sustained economic activity, bolstering investor confidence. Additionally, a continued decline in both headline and core inflation offered some welcome relief from inflationary concerns.

    Market environment and performance

    Europe’s economic landscape, following a challenging end to the prior year, vastly expected to close in a recessionary environment, proves mix, with activity showing signs of improvement and yet, weak growth prospects persisting. Consumer confidence, possibly due to households feeling optimistic about future wage growth and spending power, strengthened. Such optimism however wasn’t shared by businesses, with business sentiment across various sectors dipping in February, indicating a cautious outlook for the near future.

    Indeed, the Euro area economy moved closer to stabilization in February, Purchasing Managers’ Index (PMI) survey showed, amid an expansion in services (reading 50.2 v a previous month reading of 48.4) which largely offset the weakening manufacturing segment (reading 46.5 v a previous month reading of 46.6). Inflows of new orders fell the least since June 2023, while the rate of employment growth was at a seven-month high. On the price front, input cost inflation hit a ten-month high, and output charges increased at the fastest pace since last May. Finally, business confidence improved for a fifth successive month.

    Meanwhile, price pressures (as measured by the consumer price index) showed signs of peaking with inflation easing to 2.6% from 2.8% in January, but remained slightly above preliminary estimates of 2.5%, pushing back expectations of interest rate cuts by the ECB.

    The U.S. economy continued to defy some earlier forecasts of a slowdown, displaying signs of continued strength. Consumer spending, business activity, and employment all indicated a healthy expansion to start the year. The labour market remained particularly robust, with the January jobs report, albeit revised lower in February, showing a significant increase in nonfarm payroll jobs and a near half-century low unemployment rate. Positive signs emerged on the inflation front as well. While not yet at the Federal Reserve’s target of 2%, inflation overall continued its downward trend compared to previous months. In February, Headline inflation edged up to 3.2%, higher than forecasts and previous month reading of 3.1%, despite energy prices softening. Core inflation, which excludes volatile items, rose 0.4% (more than expected and same as previous month) from January. Annually, it core prices eased to 3.8%. From the employment front, hiring surged by 275k, exceeding the downwardly revised January figure of 229k. The unemployment rate meanwhile increased to 3.9%; the highest level since January 2022 and surpassing market expectations of 3.7%. Wage growth edged higher, with average hourly earnings rising by 0.1%, below the 0.5% monthly gain observed in January and expectations of a 0.3% increase.

    In February, Government bond yields rose, meaning prices fell as the market continued to anticipate interest rate cuts, although not immediately, as labour markets remained strong and inflation data surprised to the upside. Corporate credit, albeit mixed across rating buckets, outperformed. Investment grade ended the month lower, with European IG outperforming its US counterpart. High yield (+0.35%) – aided by the lower duration – was once again the standout performer, generating positive returns both relatively and on a total return basis. Additionally, the spread between high-yield and investment-grade yields narrowed slightly during the month, further supporting such outperformance.

    Fund performance

    Performance for the month of February proved positive, noting a 0.15% gain for the CC Income Strategy Fund, in-line with the positive performance across global high yield credit during such period.

    Market and investment outlook

    Hopes for a rapid end to interest rate hikes continued to fade in February as central bankers reiterated their commitment to data-driven policy decisions and emphasized the continued threat of inflation. Despite reaching peak levels and inflation sustaining a downward trend, Fed Chair Jerome Powell stated that rate cuts in March were unlikely. Similarly, while acknowledging progress in “disinflation,” ECB President Christine Lagarde stressed that discussions of easing policy were as yet premature. The key challenge for policy makers going forward is balancing continued high interest rates with supporting economic growth. The euro area, unlike its Western counterparts, faces an additional headwind whereby key economies, traditionally bolstering the single currency bloc, are now dragging down and offsetting the resilient growth observed in Southern European economies.

    Fixed income, for years losing its appeal – given the relatively low-yielding environment – has become more attractive. Indeed, locking in coupons at such comparably favorable levels, ahead of any policy easing, is key.

    That said, the manager will going forward continue to assess the market landscape and capitalize on appealing credit opportunities. Consistent with recent actions, the manager will continue to tailor the portfolio to match prevailing yield conditions while increasing the portfolio’s overall duration. Optimism for the year ahead remains on the back of continued rate cut expectations.

  • 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 (EUR)

    ASSET CLASS

    Mixed

    MIN. INITIAL INVESTMENT

    €5000

    FUND TYPE

    UCITS

    BASE CURRENCY

    EUR

    5 year performance*

    0%

    *View Performance History below
    Inception Date: 15 Sep 2021
    ISIN: MT7000030680
    Bloomberg Ticker: CCPISAE MV
    Distribution Yield (%): 2.00
    Underlying Yield (%): -
    Distribution: 31/05 and 30/11
    Total Net Assets: 6.59 mn
    Month end NAV in EUR: 90.93
    Number of Holdings: 13
    Auditors: Deloitte Malta
    Legal Advisor: GANADO Advocates
    Custodian: Sparkasse Bank Malta p.l.c.

    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

    UBS (Lux) Bond Fund - Euro High Yield
    19.8%
    CC Funds SICAV plc - High Income Bond Fund
    10.2%
    Nordea 1 - European High Yield Bond Fund
    8.8%
    Robeco Capital Growth Funds - High Yield Bonds
    8.7%
    DWS Invest Euro High Yield Corp
    7.9%
    BlackRock Global High Yield Bond Fund
    7.3%
    Janus Henderson Horizon Global High Yield Bond Fund
    7.0%
    Schroder International Selection Fund Global High Yield
    6.9%
    AXA World Funds - Global High Yield Bonds
    6.9%
    Fidelity Funds - European High Yield Bond Fund
    6.8%

    Top Holdings by Country

    Europe
    38.30%
    Global
    37.90%
    International
    22.50%

    Asset Allocation

    Fund 91.70%
    ETF 7.00%
    Cash 1.30%

    Performance History (EUR)*

    1Y

    7.48%

    3Y

    -%

    5Y

    -%

    * The Distributor Share Class (Class A) was launched on 15 September 2021.
    ** Performance figures are calculated using the Value Added Monthly Index "VAMI" principle. The VAMI calculates the total return gained by aninvestor from reinvestment of any dividends and additional interest gained through compounding.
    *** The Distributor Share Class (Class A) was launched on 15 September 2021.
    **** Returns quoted net of TER. Entry and exit charges may reduce returns for investors.

    Currency Allocation

    Euro 100.0%
    USD 0.0%
    GBP 0.0%
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