Investment Objectives

The Fund aims to deliver a positive total return in any three year period from a flexibly managed portfolio of global assets whilst maintaining a monthly VaR with a 99% confidence interval at or below 5% at all times. The Investment Manager shall invest primarily in a diversified portfolio across a wide spectrum of industries and sectors primarily via bonds, equities and eligible ETFs. Investment in these asset classes either directly or indirectly through UCITS Funds and/ or eligible non UCITS Funds.

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

Fund Rules

Commentary

April 2024

Introduction

April saw some sort of turning point in global financial markets, which recorded the first negative performance in the last six months, namely triggered by a reassessment of the interest rate pathway going forward. Long gone are expectations of a dovish FED, having on table multiple interest rate cuts this year on the back of a subdued inflation. Such expectations were pushed back by a negative inflation report and a lukewarm tone from the FED in regard monetary easing. All this happened on a macroeconomic backdrop   whereby global economy continues growing but a slower pace and showing some signs of consumer fatigue. Geopolitical tensions, particularly the escalation of the Middle East conflict, also contributed to a return of volatility in markets, while energy and industrial commodities continued their recent ascent. So even if one cannot yet argue that the economic landscape is depreciating, there is a sense that it does not warrant by any means a spike in financial markets. The ongoing earnings season provided more of the same, namely overall numbers ahead of market expectations, however with severe drawdowns in those market pockets where this has not been achieved or management guideline pointed towards some bumps in the road ahead. Markets seem stretched, while market participants can only wonder whether it is appropriate to be thankful for the year to date returns achieved and give way to the old adage of “selling in May and go away”. As we are slowly progressing into the current year, a wait and see approach seems to be the best strategy for the time being.

From the monetary front, the FED continued holding its ground on interest rates, again deciding not to cut as it continues a battle against inflation that has grown more difficult as of late. The FOMC also eased the pace with which it reduces bond holdings on its balance sheet, which is another leg in loosening its monetary policy. On the other hand, the post-meeting statement noted a lack of further progress in getting inflation back down to its 2% target. In Europe, the ECB also opted to hold its key interest steady, however in its case latest data points are materially more encouraging as regards the successful downsizing of inflationary pressure. Therefore, a June rate cut is currently a locked in scenario. The most exciting action from central bankers came from Japan where the BOJ is actively trying to stop a continuing yen depreciation. While at first some inflation was more than welcome to spark growth in the third largest economy in the world, a materially weaker yen has not only the potential of taking inflation out of control, but also rising trading spats in an already highly sensitive international environment.

Equity markets have broadly managed to dodge another bullet by navigating smoothly through yet another earnings season and delivering results that seems to having pleased market participants. Although the negative monthly performance might suggest otherwise, current market levels are just a whisker away from the all-time highs recorded after a stellar start of the year. While earnings have sustained elevated market levels, another tailwind for equity markets were actually bond yields. Although fixed-income instruments have become recently a real competition for equities as regards asset class return expectations, it was quite unexpected that the slowly diminishing expectations of interest rate cuts this year have not pushed bond yields higher, thus effectively not hurting valuations. This has left the equity risk premium at a level not too high but clearly also not too low compared to historical averages. It was already apparent that this year it would be earnings rather than interest rates, which could break the camel’s back and depreciate markets. So far, the earnings saved the day, and we could find ourselves in a scenario mentioned earlier, namely a temporary range trading before another decisive market push upward.

Market Environment and Performance

April Purchasing Managers’ Index (PMI) indicators showed that the Euro area economy moved closer to stabilization, amid a convincing recovery in services (reading of 53.3 versus the previous month reading of 51.5) offsetting the deteriorating manufacturing segment (reading of 45.7 versus a previous month reading of 46.1). Overall the Eurozone economy grew in Q1 with GDP expanding by 0.3% QoQ, following a -0.1% decline in Q4 2023. Headline inflation remained steady at 2.4%, marginally down from February’s 2.6%. The core rate excluding volatile food and energy prices also cooled to 2.7% – a 9th successive decline.

The US economy presented a complex picture in April. The labour market continued to shine, adding jobs at a steady pace and keeping the unemployment rate at favourable levels. This ongoing strength bodes well for consumer spending and overall economic activity. Inflation – as yet remaining a thorn in the side – headed in the right direction. Notably, annual headline inflation came in marginally lower at 3.4%, compared to March’s 3.5% and in line with forecasts. Core inflation, which excludes volatile items, eased to a three-year low of 3.6%.

April finally brought the much-expected retracement in equity markets, although not at a magnitude that could be qualified as a breaker for the bull market phase initiated in the last quarter of 2023. On the back of a generally positive earnings season outcome, the market has been carried mostly by value sectors, while technology again underperformed the global market. While geographies evolved rather in harmony, the clear outlier was China, which was long due an outperformance from the oversold levels recorded since the beginning of the year. The S&P 500 index lost 3.11% as utilities was the only sector that finished the month in green. European markets slumped as well as the EuroStoxx50 and the DAX lost 3.19% and 3.03% respectively, with energy, utilities and financials names leading the way.

Credit was conditioned by the higher 10-year Treasury yield which hit 4.7% following hotter than expected data. This has pinged corporate credit with Europe investment grade bonds proving to be more resilient, while high yield traded flat.

Fund Performance

In the month of April the Solid Future Defensive Fund registered a 1.33 per cent loss. On the equity allocation, the Fund’s allocation has been readjusted, as the Manager reposition it to better respond to the recent market developments. New conviction name Uber Technologies has been added based on a business model with global scaling optionality finally reaching operational and free cash flow earnings power, while the in house valuation models’ fair values points to a compelling investment opportunity. Also exposure to Adobe Systems has been increased based on a very interesting risk-adjusted entry level. Holding of Cisco Systems has been liquidated as recent earnings report and market trends showed limited upside potential in our view. As well, positions in Apple, Amazon, Microsoft and Walt Disney have been downsized with a view to cashing in some of the sizeable profits already achieved and for risk management considerations.  From the fixed income front, the Manager continued to implement the portfolio’s transitional phase by shifting into higher quality names, while also reflecting the current higher interest rate environment. Names added in the month were Total Energies and Dufry, name that the Manager is comfortable from a credit point of view.

Market and Investment Outlook

Going forward, the Manager believes the global economic landscape remains complex, as inflationary pressures seem to have stopped their receding trend particularly on the back of services, while there are signs consumers have finally slowed their purchasing appetite fuelled in the past by post pandemic fiscal stimuli. Recent volatility in commodities prices have also added uncertainty regarding the health in the macroeconomic landscape. While from one perspective this can be seen as a positive development of a new breath in the Chinese economic growth, from another angle it could be construed as a negative data point in relation to inflation expectations. Overall, such truly goldilocks economic environment, whereby the economy blows not too hot and not too cold, determines the Manager to maintain its conservative view on equity markets going forward, as the recent retracement seen in the markets could have more legs. The Fund continues to have a diversified allocation with a focus on quality companies and business models benefitting from secular growth trends, and offer comfort in the medium to long term. Cash levels remain at historical average in the absence of clear negative market developments.

A quick introduction to our Solid Future Defensive 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

€2500

FUND TYPE

UCITS

BASE CURRENCY

EUR

5 year performance*

-6.28%

*View Performance History below
Inception Date: 25 Oct 2011
ISIN: MT7000003687
Bloomberg Ticker: SFUDEFA MV
Distribution Yield (%): N/A
Underlying Yield (%): N/A
Distribution: N/A
Total Net Assets: 16.0 mn
Month end NAV in EUR: 148.91
Number of Holdings:
Auditors: PriceWaterhouse Coopers
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.

Performance To Date (EUR)

Top 10 Holdings

Amundi Euro Gov Bond 10-15Y
11.0%
Amundi Euro Gov Bond 7-10Y
5.3%
iShares Euro Corp Large Cap
4.1%
iShares Euro HY Corp
3.6%
iShares Fallen Angels HY Corp
3.3%
3% Govt of France 2033
2.0%
iShares USD HY Corp
1.9%
4% Eden Finance 2027
1.4%
Alphabet Inc
1.4%
Walt Disney Co/The
1.4%

Major Sector Breakdown*

Government
22.1%
Financials
20.6%
Asset 7
Communications
11.8%
Consumer Staples
11.6%
Consumer Discretionary
10.9%
Information Technology
6.5%
*** Adopting a look-through approach
Data for maturity buckets is not available for this fund.

Credit Ratings*

* Without adopting look-through approach

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 ex UK
51.0%
North America
33.4%
UK
6.5%
Emerging/Frontier Markets ex China
6.2%
Japan
2.1%
Asia Pacific ex Japan
0.8%
** Including exposure to CIS, adopting a look-through approach

Asset Allocation*

Conventional Bonds 67.6%
Equity 28.5%
Cash 3.9%
* Without adopting a look-through approach

Performance History (EUR)*

1 year

7.06%

3 year

-3.66%

5 year

-6.28%

Returns quoted net of TER. Entry and exit charges may reduce returns for investors.
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. Currency fluctuations may affect the value of investments and any derived income.

Currency Allocation

Euro 68.1%
USD 31.1%
GBP 0.7%
Data for risk statistics is not available for this fund.

Interested in this product?

  • Investment Objectives

    The Fund aims to deliver a positive total return in any three year period from a flexibly managed portfolio of global assets whilst maintaining a monthly VaR with a 99% confidence interval at or below 5% at all times. The Investment Manager shall invest primarily in a diversified portfolio across a wide spectrum of industries and sectors primarily via bonds, equities and eligible ETFs. Investment in these asset classes either directly or indirectly through UCITS Funds and/ or eligible non UCITS Funds.

    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

    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

    April 2024

    Introduction

    April saw some sort of turning point in global financial markets, which recorded the first negative performance in the last six months, namely triggered by a reassessment of the interest rate pathway going forward. Long gone are expectations of a dovish FED, having on table multiple interest rate cuts this year on the back of a subdued inflation. Such expectations were pushed back by a negative inflation report and a lukewarm tone from the FED in regard monetary easing. All this happened on a macroeconomic backdrop   whereby global economy continues growing but a slower pace and showing some signs of consumer fatigue. Geopolitical tensions, particularly the escalation of the Middle East conflict, also contributed to a return of volatility in markets, while energy and industrial commodities continued their recent ascent. So even if one cannot yet argue that the economic landscape is depreciating, there is a sense that it does not warrant by any means a spike in financial markets. The ongoing earnings season provided more of the same, namely overall numbers ahead of market expectations, however with severe drawdowns in those market pockets where this has not been achieved or management guideline pointed towards some bumps in the road ahead. Markets seem stretched, while market participants can only wonder whether it is appropriate to be thankful for the year to date returns achieved and give way to the old adage of “selling in May and go away”. As we are slowly progressing into the current year, a wait and see approach seems to be the best strategy for the time being.

    From the monetary front, the FED continued holding its ground on interest rates, again deciding not to cut as it continues a battle against inflation that has grown more difficult as of late. The FOMC also eased the pace with which it reduces bond holdings on its balance sheet, which is another leg in loosening its monetary policy. On the other hand, the post-meeting statement noted a lack of further progress in getting inflation back down to its 2% target. In Europe, the ECB also opted to hold its key interest steady, however in its case latest data points are materially more encouraging as regards the successful downsizing of inflationary pressure. Therefore, a June rate cut is currently a locked in scenario. The most exciting action from central bankers came from Japan where the BOJ is actively trying to stop a continuing yen depreciation. While at first some inflation was more than welcome to spark growth in the third largest economy in the world, a materially weaker yen has not only the potential of taking inflation out of control, but also rising trading spats in an already highly sensitive international environment.

    Equity markets have broadly managed to dodge another bullet by navigating smoothly through yet another earnings season and delivering results that seems to having pleased market participants. Although the negative monthly performance might suggest otherwise, current market levels are just a whisker away from the all-time highs recorded after a stellar start of the year. While earnings have sustained elevated market levels, another tailwind for equity markets were actually bond yields. Although fixed-income instruments have become recently a real competition for equities as regards asset class return expectations, it was quite unexpected that the slowly diminishing expectations of interest rate cuts this year have not pushed bond yields higher, thus effectively not hurting valuations. This has left the equity risk premium at a level not too high but clearly also not too low compared to historical averages. It was already apparent that this year it would be earnings rather than interest rates, which could break the camel’s back and depreciate markets. So far, the earnings saved the day, and we could find ourselves in a scenario mentioned earlier, namely a temporary range trading before another decisive market push upward.

    Market Environment and Performance

    April Purchasing Managers’ Index (PMI) indicators showed that the Euro area economy moved closer to stabilization, amid a convincing recovery in services (reading of 53.3 versus the previous month reading of 51.5) offsetting the deteriorating manufacturing segment (reading of 45.7 versus a previous month reading of 46.1). Overall the Eurozone economy grew in Q1 with GDP expanding by 0.3% QoQ, following a -0.1% decline in Q4 2023. Headline inflation remained steady at 2.4%, marginally down from February’s 2.6%. The core rate excluding volatile food and energy prices also cooled to 2.7% – a 9th successive decline.

    The US economy presented a complex picture in April. The labour market continued to shine, adding jobs at a steady pace and keeping the unemployment rate at favourable levels. This ongoing strength bodes well for consumer spending and overall economic activity. Inflation – as yet remaining a thorn in the side – headed in the right direction. Notably, annual headline inflation came in marginally lower at 3.4%, compared to March’s 3.5% and in line with forecasts. Core inflation, which excludes volatile items, eased to a three-year low of 3.6%.

    April finally brought the much-expected retracement in equity markets, although not at a magnitude that could be qualified as a breaker for the bull market phase initiated in the last quarter of 2023. On the back of a generally positive earnings season outcome, the market has been carried mostly by value sectors, while technology again underperformed the global market. While geographies evolved rather in harmony, the clear outlier was China, which was long due an outperformance from the oversold levels recorded since the beginning of the year. The S&P 500 index lost 3.11% as utilities was the only sector that finished the month in green. European markets slumped as well as the EuroStoxx50 and the DAX lost 3.19% and 3.03% respectively, with energy, utilities and financials names leading the way.

    Credit was conditioned by the higher 10-year Treasury yield which hit 4.7% following hotter than expected data. This has pinged corporate credit with Europe investment grade bonds proving to be more resilient, while high yield traded flat.

    Fund Performance

    In the month of April the Solid Future Defensive Fund registered a 1.33 per cent loss. On the equity allocation, the Fund’s allocation has been readjusted, as the Manager reposition it to better respond to the recent market developments. New conviction name Uber Technologies has been added based on a business model with global scaling optionality finally reaching operational and free cash flow earnings power, while the in house valuation models’ fair values points to a compelling investment opportunity. Also exposure to Adobe Systems has been increased based on a very interesting risk-adjusted entry level. Holding of Cisco Systems has been liquidated as recent earnings report and market trends showed limited upside potential in our view. As well, positions in Apple, Amazon, Microsoft and Walt Disney have been downsized with a view to cashing in some of the sizeable profits already achieved and for risk management considerations.  From the fixed income front, the Manager continued to implement the portfolio’s transitional phase by shifting into higher quality names, while also reflecting the current higher interest rate environment. Names added in the month were Total Energies and Dufry, name that the Manager is comfortable from a credit point of view.

    Market and Investment Outlook

    Going forward, the Manager believes the global economic landscape remains complex, as inflationary pressures seem to have stopped their receding trend particularly on the back of services, while there are signs consumers have finally slowed their purchasing appetite fuelled in the past by post pandemic fiscal stimuli. Recent volatility in commodities prices have also added uncertainty regarding the health in the macroeconomic landscape. While from one perspective this can be seen as a positive development of a new breath in the Chinese economic growth, from another angle it could be construed as a negative data point in relation to inflation expectations. Overall, such truly goldilocks economic environment, whereby the economy blows not too hot and not too cold, determines the Manager to maintain its conservative view on equity markets going forward, as the recent retracement seen in the markets could have more legs. The Fund continues to have a diversified allocation with a focus on quality companies and business models benefitting from secular growth trends, and offer comfort in the medium to long term. Cash levels remain at historical average in the absence of clear negative market developments.

  • 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

    €2500

    FUND TYPE

    UCITS

    BASE CURRENCY

    EUR

    5 year performance*

    -6.28%

    *View Performance History below
    Inception Date: 25 Oct 2011
    ISIN: MT7000003687
    Bloomberg Ticker: SFUDEFA MV
    Distribution Yield (%): N/A
    Underlying Yield (%): N/A
    Distribution: N/A
    Total Net Assets: 16.0 mn
    Month end NAV in EUR: 148.91
    Number of Holdings:
    Auditors: PriceWaterhouse Coopers
    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

    Amundi Euro Gov Bond 10-15Y
    11.0%
    Amundi Euro Gov Bond 7-10Y
    5.3%
    iShares Euro Corp Large Cap
    4.1%
    iShares Euro HY Corp
    3.6%
    iShares Fallen Angels HY Corp
    3.3%
    3% Govt of France 2033
    2.0%
    iShares USD HY Corp
    1.9%
    4% Eden Finance 2027
    1.4%
    Alphabet Inc
    1.4%
    Walt Disney Co/The
    1.4%

    Top Holdings by Country*

    Europe ex UK
    51.0%
    North America
    33.4%
    UK
    6.5%
    Emerging/Frontier Markets ex China
    6.2%
    Japan
    2.1%
    Asia Pacific ex Japan
    0.8%
    ** Including exposure to CIS, adopting a look-through approach

    Major Sector Breakdown*

    Government
    22.1%
    Financials
    20.6%
    Asset 7
    Communications
    11.8%
    Consumer Staples
    11.6%
    Consumer Discretionary
    10.9%
    Information Technology
    6.5%
    *** Adopting a look-through approach

    Asset Allocation*

    Conventional Bonds 67.6%
    Equity 28.5%
    Cash 3.9%
    * Without adopting a look-through approach

    Performance History (EUR)*

    1 year

    7.06%

    3 year

    -3.66%

    5 year

    -6.28%

    Returns quoted net of TER. Entry and exit charges may reduce returns for investors.
    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. Currency fluctuations may affect the value of investments and any derived income.

    Credit Ratings*

    * Without adopting look-through approach

    Currency Allocation

    Euro 68.1%
    USD 31.1%
    GBP 0.7%
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