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 (“We”) will invest in collective investment schemes (“CIS”) (including UCITS, exchange-traded funds and other collective investment undertakings) that invest in a broad range of assets, including debt and equity securities. In instances, this may involve investing in CISs that are managed by the Investment Manager.

The Investment Manager (“We”) aims to build a diversified portfolio spread across several industries and sectors.

The Fund is actively managed, not managed by reference to any index.

The Fund is classified under Article 6 of the SFDR meaning that the investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities.

Investor Profile

A typical investor in the CC 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

September 2023

Introduction

Market volatility, primarily reflecting renewed stress in the Chinese property market, weak macroeconomic data coming out of China, and sovereign bond yields heading higher, took centre stage. The latter, a consequence of the uncertainty surrounding central bankers’ upcoming moves in the highly anticipated September policy meetings.

Fed minutes revealed that most officials remain concerned about inflation, and thus left the door open for additional rate hikes if necessary while Powell, speaking at the Jackson Hole Symposium emphasized the potential necessity for the Fed to implement additional interest rate hikes to effectively manage inflation. In Europe, policymakers maintained the possibility of a September rate hike as they expect inflation “to remain too high for too long”. Certain members however appear to suggest that such a move might no longer be necessary.

From a performance viewpoint, uncertainty and shifts across the curve weighed on, driving a mixed performance across the income-generating asset class. Treasury yields widened while European sovereigns realized gains. The lower rated and thus riskier European and US names outperformed, noting marginal returns.

Market environment and performance

Concerns of a potential recession, which had been somewhat dismissed earlier in the year due to the resilience of economic activity, have now reemerged. The downward revision of the Q2 GDP growth rate, mainly attributed to weak exports and stagnant domestic consumption, has contributed to these worries. The ongoing decline in private sector activity has further cast doubt on the likelihood of a positive Q3 growth rate figure. Purchasing Managers’ Index (PMI) indicators continued to show signs of weakness amid a second successive contraction in services (reading 48.7 v a previous month reading of 47.9) for 2023 and a continued downturn in manufacturing (reading 43.4 v a previous month reading of 43.5). Overall, new orders dropped while backlogs of work experienced the largest decline since June 2020. The rate of job creation was the joint second-slowest in the current 32-month sequence of growth. From an inflationary front, input prices accelerated, while selling prices rose the least in over a year consequent to a weak demand environment.

Despite a notable increase in oil prices, there were positive developments on the inflation front, as year-on-year core measures showed signs of easing in the majority of economies. Annual inflation rate in the Euro Area declined to 4.3%, reaching its lowest level since October 2021 and below market estimates of 4.5%. Prices increased at a slower pace for services, non-energy industrial goods, and food, alcohol & tobacco. Core inflation – a highly monitored figured by the ECB – eased, dropping to 4.5% from 5.3% in the previous month.

In the U.S., the economy – while still revolving in expansionary territory – nearly stalled due to a weaker expansion in the services (50.2 v 50.3 in August) and a sustained contraction in manufacturing (49.8 v 47.9 in August). Total inflows of new business declined the most since December 2022, and outstanding business dropped at the sharpest rate since May 2020. Meanwhile, the rate of job creation accelerated, amid some reports that staff retention was improving. Regarding prices, cost pressures ticked higher again, as input prices rose at a marked rate. The rate of output charge inflation however proved softer than those seen on average as weak client interest stymied firms’ ability to hike selling prices.

Annual rate of inflation in the US remained steady at 3.7% in September, defying market expectations of a slight decrease to 3.6%, as a softer decline in energy prices offset slowing inflationary pressures in other categories. Core inflation which excludes volatile items such as food and energy however eased to 4.1%. From the employment front, hiring increased by 336k, well above an upwardly revised 227k in August, and above forecasts of 170k, signalling a resilient labour market despite the Fed’s tightening campaign. Meanwhile, the unemployment rate and labour force participation rate remained stable at 3.8% and 62.8%, respectively. The nominal wage growth (4.2%) showed signs of easing, increasing below market estimates.

From a performance viewpoint, credit markets had a relatively weak month, with European investment grade pricing in a bleaker economic outlook, leading to negative total returns. US investment grade too saw losses; -2.45%, underperforming its relative counterpart. High yield credit – the riskier bonds as determined by credit rating agencies – outperformed, aided by the lower interest rate sensitivity. European and US high yield credit returned +0.32% and -1.16%, respectively. 

Fund performance

Performance for the month of September proved negative, noting a 0.32% loss for the CC Income Strategy Fund, in-line with the negative performance across global investment grade and high yield credit during such period.

Market and investment outlook

The positive momentum from the previous months came to a halt in August, as spreads briefly widened from the previous month-end, in-line with moves observed across sovereigns, notably treasuries, reflecting expectations that rates may remain higher for longer. 

Minutes issued by both the ECB and Fed didn’t firmly indicate whether there would be further rate increases in September. Nonetheless, the prevailing anticipation is that the upcoming hike, should there be, will possibly mark the end of a somewhat aggressive cycle, employed to mitigate the largely persistent inflationary pressures initially thought to have been transitory.

As previously conferred, the fixed-income asset class remains an attractive investment proposition. Expectations of a decorrelation phase between bonds and equities augurs well for the segment in 2023. In terms of bond picking, the Manager will continue to assess the market landscape and capitalize on attractive credit stories. Similar to actions taken in recent weeks, the Manager will continue adjusting the portfolio to align with the prevailing yield environment.

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

RETURN (SINCE INCEPTION)*

-9.45%

*View Performance History below
Inception Date: 15 Sep 2021
ISIN: MT7000030680
Bloomberg Ticker: CCPISAE MV
Entry Charge: up to 2.50%
Total Expense Ratio: 2.18%
Exit Charge: None
Distribution Yield (%): 2.83
Underlying Yield (%): -
Distribution: 31/05 and 30/11
Total Net Assets: 6.51 mn
Month end NAV in EUR: 87.43
Number of Holdings: 13
Auditors: Deloitte Malta
Legal Advisor: GANADO Advocates
Custodian: Sparkasse Bank Malta p.l.c.
% of Top 10 Holdings: 88.5

Performance To Date (EUR)

Top 10 Holdings

UBS (Lux) Bond Fund - Euro High Yield
20.1%
CC Funds SICAV plc - High Income Bond Fund
9.9%
Nordea 1 - European High Yield Bond Fund
8.3%
Robeco Capital Growth Funds - High Yield Bonds
8.3%
DWS Invest Euro High Yield Corp
7.6%
BlackRock Global High Yield Bond Fund
7.1%
AXA World Funds - Global High Yield Bonds
6.9%
Schroder International Selection Fund Global High Yield
6.8%
Janus Henderson Horizon Global High Yield Bond Fund
6.8%
Fidelity Funds - European High Yield Bond Fund
6.7%
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

Global
39.20%
Europe
37.90%
International
22.10%

Asset Allocation

Fund 89.90%
ETF 9.10%
Cash 0.90%

Performance History (EUR)*

YTD***

3.73%

2022

-11.59%

2021

-1.26%

1-month

-0.32%

6-month

2.45%

12-month

6.82%

* 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 (“We”) will invest in collective investment schemes (“CIS”) (including UCITS, exchange-traded funds and other collective investment undertakings) that invest in a broad range of assets, including debt and equity securities. In instances, this may involve investing in CISs that are managed by the Investment Manager.

    The Investment Manager (“We”) aims to build a diversified portfolio spread across several industries and sectors.

    The Fund is actively managed, not managed by reference to any index.

    The Fund is classified under Article 6 of the SFDR meaning that the investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities.

  • Investor profile

    A typical investor in the CC 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

    September 2023

    Introduction

    Market volatility, primarily reflecting renewed stress in the Chinese property market, weak macroeconomic data coming out of China, and sovereign bond yields heading higher, took centre stage. The latter, a consequence of the uncertainty surrounding central bankers’ upcoming moves in the highly anticipated September policy meetings.

    Fed minutes revealed that most officials remain concerned about inflation, and thus left the door open for additional rate hikes if necessary while Powell, speaking at the Jackson Hole Symposium emphasized the potential necessity for the Fed to implement additional interest rate hikes to effectively manage inflation. In Europe, policymakers maintained the possibility of a September rate hike as they expect inflation “to remain too high for too long”. Certain members however appear to suggest that such a move might no longer be necessary.

    From a performance viewpoint, uncertainty and shifts across the curve weighed on, driving a mixed performance across the income-generating asset class. Treasury yields widened while European sovereigns realized gains. The lower rated and thus riskier European and US names outperformed, noting marginal returns.

    Market environment and performance

    Concerns of a potential recession, which had been somewhat dismissed earlier in the year due to the resilience of economic activity, have now reemerged. The downward revision of the Q2 GDP growth rate, mainly attributed to weak exports and stagnant domestic consumption, has contributed to these worries. The ongoing decline in private sector activity has further cast doubt on the likelihood of a positive Q3 growth rate figure. Purchasing Managers’ Index (PMI) indicators continued to show signs of weakness amid a second successive contraction in services (reading 48.7 v a previous month reading of 47.9) for 2023 and a continued downturn in manufacturing (reading 43.4 v a previous month reading of 43.5). Overall, new orders dropped while backlogs of work experienced the largest decline since June 2020. The rate of job creation was the joint second-slowest in the current 32-month sequence of growth. From an inflationary front, input prices accelerated, while selling prices rose the least in over a year consequent to a weak demand environment.

    Despite a notable increase in oil prices, there were positive developments on the inflation front, as year-on-year core measures showed signs of easing in the majority of economies. Annual inflation rate in the Euro Area declined to 4.3%, reaching its lowest level since October 2021 and below market estimates of 4.5%. Prices increased at a slower pace for services, non-energy industrial goods, and food, alcohol & tobacco. Core inflation – a highly monitored figured by the ECB – eased, dropping to 4.5% from 5.3% in the previous month.

    In the U.S., the economy – while still revolving in expansionary territory – nearly stalled due to a weaker expansion in the services (50.2 v 50.3 in August) and a sustained contraction in manufacturing (49.8 v 47.9 in August). Total inflows of new business declined the most since December 2022, and outstanding business dropped at the sharpest rate since May 2020. Meanwhile, the rate of job creation accelerated, amid some reports that staff retention was improving. Regarding prices, cost pressures ticked higher again, as input prices rose at a marked rate. The rate of output charge inflation however proved softer than those seen on average as weak client interest stymied firms’ ability to hike selling prices.

    Annual rate of inflation in the US remained steady at 3.7% in September, defying market expectations of a slight decrease to 3.6%, as a softer decline in energy prices offset slowing inflationary pressures in other categories. Core inflation which excludes volatile items such as food and energy however eased to 4.1%. From the employment front, hiring increased by 336k, well above an upwardly revised 227k in August, and above forecasts of 170k, signalling a resilient labour market despite the Fed’s tightening campaign. Meanwhile, the unemployment rate and labour force participation rate remained stable at 3.8% and 62.8%, respectively. The nominal wage growth (4.2%) showed signs of easing, increasing below market estimates.

    From a performance viewpoint, credit markets had a relatively weak month, with European investment grade pricing in a bleaker economic outlook, leading to negative total returns. US investment grade too saw losses; -2.45%, underperforming its relative counterpart. High yield credit – the riskier bonds as determined by credit rating agencies – outperformed, aided by the lower interest rate sensitivity. European and US high yield credit returned +0.32% and -1.16%, respectively. 

    Fund performance

    Performance for the month of September proved negative, noting a 0.32% loss for the CC Income Strategy Fund, in-line with the negative performance across global investment grade and high yield credit during such period.

    Market and investment outlook

    The positive momentum from the previous months came to a halt in August, as spreads briefly widened from the previous month-end, in-line with moves observed across sovereigns, notably treasuries, reflecting expectations that rates may remain higher for longer. 

    Minutes issued by both the ECB and Fed didn’t firmly indicate whether there would be further rate increases in September. Nonetheless, the prevailing anticipation is that the upcoming hike, should there be, will possibly mark the end of a somewhat aggressive cycle, employed to mitigate the largely persistent inflationary pressures initially thought to have been transitory.

    As previously conferred, the fixed-income asset class remains an attractive investment proposition. Expectations of a decorrelation phase between bonds and equities augurs well for the segment in 2023. In terms of bond picking, the Manager will continue to assess the market landscape and capitalize on attractive credit stories. Similar to actions taken in recent weeks, the Manager will continue adjusting the portfolio to align with the prevailing yield environment.

  • 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

    RETURN (SINCE INCEPTION)*

    -9.45%

    *View Performance History below
    Inception Date: 15 Sep 2021
    ISIN: MT7000030680
    Bloomberg Ticker: CCPISAE MV
    Entry Charge: up to 2.50%
    Total Expense Ratio: 2.18%
    Exit Charge: None
    Distribution Yield (%): 2.83
    Underlying Yield (%): -
    Distribution: 31/05 and 30/11
    Total Net Assets: 6.51 mn
    Month end NAV in EUR: 87.43
    Number of Holdings: 13
    Auditors: Deloitte Malta
    Legal Advisor: GANADO Advocates
    Custodian: Sparkasse Bank Malta p.l.c.
    % of Top 10 Holdings: 88.5

    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
    20.1%
    CC Funds SICAV plc - High Income Bond Fund
    9.9%
    Nordea 1 - European High Yield Bond Fund
    8.3%
    Robeco Capital Growth Funds - High Yield Bonds
    8.3%
    DWS Invest Euro High Yield Corp
    7.6%
    BlackRock Global High Yield Bond Fund
    7.1%
    AXA World Funds - Global High Yield Bonds
    6.9%
    Schroder International Selection Fund Global High Yield
    6.8%
    Janus Henderson Horizon Global High Yield Bond Fund
    6.8%
    Fidelity Funds - European High Yield Bond Fund
    6.7%

    Top Holdings by Country

    Global
    39.20%
    Europe
    37.90%
    International
    22.10%

    Asset Allocation

    Fund 89.90%
    ETF 9.10%
    Cash 0.90%

    Performance History (EUR)*

    YTD***

    3.73%

    2022

    -11.59%

    2021

    -1.26%

    1-month

    -0.32%

    6-month

    2.45%

    12-month

    6.82%

    * 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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