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

February 2023

Introduction

From a market sentiment perspective, the month of February acted like a glass of cool water after the heat recorded last month. Generally higher than expected inflation numbers and a continuously tight labour market rekindled fears of higher interest rates going forward. Although talks of an economic recession this year have not resurfaced, it looks like markets are finally grasping the idea that this year there probably won’t be any pivoting on behalf of central banks either. In spite of a somewhat decent corporate earnings season, management guidelines have been rather on the cautious side with some market pockets where consumers’ disposable income already seem pressured. As well, the Chinese economy recovery story for this year has seen a significant setback when the GDP growth target set by the Communist authorities for this year at 5% is the lowest in recent history, showing that betting on a global economic salvation coming from this geography might be a more complicated reasoning that initially thought. Also a muted evolution of oil prices worldwide, in spite of an announcement of upcoming production cuts in Russia, keeps everybody unclear about the ongoing strength of the global economy. Leading macroeconomic readings still point to a negative sentiment in the economy, which continues coming at odds with a very tight jobs market. Such complex mosaic of contrasting signals keeps market participants guessing where the economy is heading next, making it very difficult to anticipate the optimal portfolio positioning in terms of asset class or geography.

From the monetary front, comments from various central bankers converged in resuming a hawkish tone more in line with the negative surprise to the upside of the latest inflation numbers, particularly in the US. Previous conviction of the current tightening cycle reaching its peak has left the floor open to speculations that the recent downturn in FED’s rate hikes to just 25bps might have been too hasty. The acknowledgement of a protracted tightening policy against inflation has also been confirmed lately by a steep rise in yields on the short end of the curve. Such a move brings markets closer to FED’s previous messaging as regards interest rates path to the end of the year.

Initially February seemed to continue the year-to-date enthusiasm in equities as markets were still convincing themselves that the worst of the ongoing monetary tightening cycle is truly behind us. That was until US inflation numbers made market participants rethinking such scenario. This however did not change the reality of US equity markets trading in a range over the last quarter, whereas European markets continued trending higher. The continuation of European equities outperforming their US counterparts since the market through last September has been quite surprising considering that from a monetary policy perspective the Eurozone has been lagging for quite some time. On both sides of the Atlantic however equities continue looking expensive relative to fixed income, even more so should additional monetary tightening lie ahead. We continue moving through a very challenging market environment. 

Market Environment and Performance

Forward looking indicators expanded for a second consecutive month in Europe, aided by an accelerating services sector and improved manufacturing supply chains. Euro-area manufacturing PMI reading (48.5 v a previous month of 48.8) remained in contractionary territory, albeit at a modest gain in production. Services (reading 53.0 v previous reading of 50.8) advanced in the strongest expansion since last June. In February the annual inflation rate dropped to 8.5% from 8.6% in the previous month, as core inflation which excludes transitory or temporary price volatility rose to 5.6% from 5.3% level in the previous month.

In the U.S. aggregate business activity rose to 50.2, sharply up from the 46.8 in the previous month, following a marginal increase in the service sector output and a slower decline in manufacturing. Manufacturing PMI (reading of 47.8) pointed to a fourth successive contraction in factory activity, albeit the smallest one. Services PMI reading increased to 50.5 from 46.0, the first expansion in seen in seven months.  Annual inflation rate expectations, despite consecutive months of declines, uncertainty remains of whether the downward trend will be retained.

Equity markets posted a mixed picture performance in February as fears of ongoing inflationary pressures ultimately pushing interest rates higher in the near term have led market participants to a reassessment of current market valuation multiples. The S&P 500 index lost 0.23% as value sectors regained the investors’ attention as yield curves started shifting higher again. In Europe, the EuroStoxx50 and the DAX gained 1.80% and 1.57% respectively, concentrating a decent performance particularly in the consumer staples, financials and industrials sectors as earnings releases were above market expectations.

In February, credit, saw a downward trend reigniting with sovereign bonds, investment grade bonds, and the more speculative tranche; high yield credit, generating overall negative returns. Indeed, global high yield indices saw a loss of c. 1.21%.

Fund Performance

In the month of February the Solid Future Defensive Fund lost 0.91 per cent, pointing towards a year-to-date performance of 0.35 per cent gain. On the equity allocation, the Fund’s portfolio has not been adjusted during the month, as the Manager considered it was well positioned to the expected retracement in the recent rally seen in the global equity markets. From the fixed income front, the Manager took opportunity of the repricing yields in recently issued names, by tapping names such as Imperial Brands, Intesa San Paolo and EDF.

Market and Investment Outlook

Going forward, the Manager is of the view that should the monetary stance make a U-turn towards hawkishness and more tightening follow as a consequence, the recent positive expectations on this year’s macroeconomic environment will ultimately see a reversal. From a credit point of view, the Manger believes that prolonged levels of sticky inflation might pressure further benchmark yields, and thus duration management remains imperative.

From the equity front, the Manager believes that current equities markets valuations are still less encouraging as regards return expectations. Another angle leading to the same conclusion is the fact that markets seem to be much undecided as regards defining a clear direction which might be conducive of a protracted period of range trading. In such a market environment the Manager remains cautious regarding equities and favours strategies focused on income-generation and less so on growth stories. Sector allocation and stock selection remain paramount, leaving the active portfolio allocation as the natural strategy for the time being.

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

€1000

FUND TYPE

UCITS

BASE CURRENCY

EUR

RETURN (SINCE INCEPTION)*

-6.58%

*View Performance History below
Inception Date: 25 Oct 2011
ISIN: MT7000003687
Bloomberg Ticker: SFUDEFA MV
Entry Charge: 0.75%
Total Expense Ratio: 3.37%
Exit Charge: up to 5%
Distribution Yield (%): N/A
Underlying Yield (%): N/A
Distribution: N/A
Total Net Assets: 17.5 mn
Month end NAV in EUR: 140.13
Number of Holdings:
Auditors: PriceWaterhouse Coopers
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
% of Top 10 Holdings: 43.6

Performance To Date (EUR)

Top 10 Holdings

Lyxor Euro Gov Bond 1-3YR
9.3%
iShares Euro Corp 1-5YR
7.9%
Nordea Stable Return
6.5%
iShares Euro Corp Large Cap
3.7%
iShares EUR HY Crop
3.7%
iShares Fallen Angels HY Corp
3.4%
iShares MSCI World
2.9%
iShares MSCI EM Asia Accc
2.3%
iShares Edge MSCI World Min
2.0%
Lyxor EUR Government 3-5YR
1.9%

Major Sector Breakdown*

Financials
23.9%
Consumer Staples
15.1%
Government
11.6%
Consumer Discretionary
11.5%
Asset 7
Communications
8.8%
Industrials
6.0%
*** 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
50.1%
North America
33.4%
UK
6.6%
Emerging/Frontier Markets ex China
6.1%
Japan
2.1%
China
1.2%
Asia Pacific ex Japan
0.5%
** Including exposure to CIS, adopting a look-through approach

Asset Allocation*

Conventional Bonds 59.5%
Equity 24.5%
Absolute Return 6.5%
Mixed Assets 1.8%
Cash 7.7%
* Without adopting a look-through approach

Performance History (EUR)*

YTD

0.35%

2022

-11.74%

2021

4.06%

2020

-5.59%

2019

8.08%

2018

-12.57%

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 77.2%
USD 21.8%
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

    February 2023

    Introduction

    From a market sentiment perspective, the month of February acted like a glass of cool water after the heat recorded last month. Generally higher than expected inflation numbers and a continuously tight labour market rekindled fears of higher interest rates going forward. Although talks of an economic recession this year have not resurfaced, it looks like markets are finally grasping the idea that this year there probably won’t be any pivoting on behalf of central banks either. In spite of a somewhat decent corporate earnings season, management guidelines have been rather on the cautious side with some market pockets where consumers’ disposable income already seem pressured. As well, the Chinese economy recovery story for this year has seen a significant setback when the GDP growth target set by the Communist authorities for this year at 5% is the lowest in recent history, showing that betting on a global economic salvation coming from this geography might be a more complicated reasoning that initially thought. Also a muted evolution of oil prices worldwide, in spite of an announcement of upcoming production cuts in Russia, keeps everybody unclear about the ongoing strength of the global economy. Leading macroeconomic readings still point to a negative sentiment in the economy, which continues coming at odds with a very tight jobs market. Such complex mosaic of contrasting signals keeps market participants guessing where the economy is heading next, making it very difficult to anticipate the optimal portfolio positioning in terms of asset class or geography.

    From the monetary front, comments from various central bankers converged in resuming a hawkish tone more in line with the negative surprise to the upside of the latest inflation numbers, particularly in the US. Previous conviction of the current tightening cycle reaching its peak has left the floor open to speculations that the recent downturn in FED’s rate hikes to just 25bps might have been too hasty. The acknowledgement of a protracted tightening policy against inflation has also been confirmed lately by a steep rise in yields on the short end of the curve. Such a move brings markets closer to FED’s previous messaging as regards interest rates path to the end of the year.

    Initially February seemed to continue the year-to-date enthusiasm in equities as markets were still convincing themselves that the worst of the ongoing monetary tightening cycle is truly behind us. That was until US inflation numbers made market participants rethinking such scenario. This however did not change the reality of US equity markets trading in a range over the last quarter, whereas European markets continued trending higher. The continuation of European equities outperforming their US counterparts since the market through last September has been quite surprising considering that from a monetary policy perspective the Eurozone has been lagging for quite some time. On both sides of the Atlantic however equities continue looking expensive relative to fixed income, even more so should additional monetary tightening lie ahead. We continue moving through a very challenging market environment. 

    Market Environment and Performance

    Forward looking indicators expanded for a second consecutive month in Europe, aided by an accelerating services sector and improved manufacturing supply chains. Euro-area manufacturing PMI reading (48.5 v a previous month of 48.8) remained in contractionary territory, albeit at a modest gain in production. Services (reading 53.0 v previous reading of 50.8) advanced in the strongest expansion since last June. In February the annual inflation rate dropped to 8.5% from 8.6% in the previous month, as core inflation which excludes transitory or temporary price volatility rose to 5.6% from 5.3% level in the previous month.

    In the U.S. aggregate business activity rose to 50.2, sharply up from the 46.8 in the previous month, following a marginal increase in the service sector output and a slower decline in manufacturing. Manufacturing PMI (reading of 47.8) pointed to a fourth successive contraction in factory activity, albeit the smallest one. Services PMI reading increased to 50.5 from 46.0, the first expansion in seen in seven months.  Annual inflation rate expectations, despite consecutive months of declines, uncertainty remains of whether the downward trend will be retained.

    Equity markets posted a mixed picture performance in February as fears of ongoing inflationary pressures ultimately pushing interest rates higher in the near term have led market participants to a reassessment of current market valuation multiples. The S&P 500 index lost 0.23% as value sectors regained the investors’ attention as yield curves started shifting higher again. In Europe, the EuroStoxx50 and the DAX gained 1.80% and 1.57% respectively, concentrating a decent performance particularly in the consumer staples, financials and industrials sectors as earnings releases were above market expectations.

    In February, credit, saw a downward trend reigniting with sovereign bonds, investment grade bonds, and the more speculative tranche; high yield credit, generating overall negative returns. Indeed, global high yield indices saw a loss of c. 1.21%.

    Fund Performance

    In the month of February the Solid Future Defensive Fund lost 0.91 per cent, pointing towards a year-to-date performance of 0.35 per cent gain. On the equity allocation, the Fund’s portfolio has not been adjusted during the month, as the Manager considered it was well positioned to the expected retracement in the recent rally seen in the global equity markets. From the fixed income front, the Manager took opportunity of the repricing yields in recently issued names, by tapping names such as Imperial Brands, Intesa San Paolo and EDF.

    Market and Investment Outlook

    Going forward, the Manager is of the view that should the monetary stance make a U-turn towards hawkishness and more tightening follow as a consequence, the recent positive expectations on this year’s macroeconomic environment will ultimately see a reversal. From a credit point of view, the Manger believes that prolonged levels of sticky inflation might pressure further benchmark yields, and thus duration management remains imperative.

    From the equity front, the Manager believes that current equities markets valuations are still less encouraging as regards return expectations. Another angle leading to the same conclusion is the fact that markets seem to be much undecided as regards defining a clear direction which might be conducive of a protracted period of range trading. In such a market environment the Manager remains cautious regarding equities and favours strategies focused on income-generation and less so on growth stories. Sector allocation and stock selection remain paramount, leaving the active portfolio allocation as the natural strategy for the time being.

  • 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

    €1000

    FUND TYPE

    UCITS

    BASE CURRENCY

    EUR

    RETURN (SINCE INCEPTION)*

    -6.58%

    *View Performance History below
    Inception Date: 25 Oct 2011
    ISIN: MT7000003687
    Bloomberg Ticker: SFUDEFA MV
    Entry Charge: 0.75%
    Total Expense Ratio: 3.37%
    Exit Charge: up to 5%
    Distribution Yield (%): N/A
    Underlying Yield (%): N/A
    Distribution: N/A
    Total Net Assets: 17.5 mn
    Month end NAV in EUR: 140.13
    Number of Holdings:
    Auditors: PriceWaterhouse Coopers
    Legal Advisor: Ganado Advocates
    Custodian: Sparkasse Bank Malta p.l.c.
    % of Top 10 Holdings: 43.6

    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

    Lyxor Euro Gov Bond 1-3YR
    9.3%
    iShares Euro Corp 1-5YR
    7.9%
    Nordea Stable Return
    6.5%
    iShares Euro Corp Large Cap
    3.7%
    iShares EUR HY Crop
    3.7%
    iShares Fallen Angels HY Corp
    3.4%
    iShares MSCI World
    2.9%
    iShares MSCI EM Asia Accc
    2.3%
    iShares Edge MSCI World Min
    2.0%
    Lyxor EUR Government 3-5YR
    1.9%

    Top Holdings by Country*

    Europe ex UK
    50.1%
    North America
    33.4%
    UK
    6.6%
    Emerging/Frontier Markets ex China
    6.1%
    Japan
    2.1%
    China
    1.2%
    Asia Pacific ex Japan
    0.5%
    ** Including exposure to CIS, adopting a look-through approach

    Major Sector Breakdown*

    Financials
    23.9%
    Consumer Staples
    15.1%
    Government
    11.6%
    Consumer Discretionary
    11.5%
    Asset 7
    Communications
    8.8%
    Industrials
    6.0%
    *** Adopting a look-through approach

    Asset Allocation*

    Conventional Bonds 59.5%
    Equity 24.5%
    Absolute Return 6.5%
    Mixed Assets 1.8%
    Cash 7.7%
    * Without adopting a look-through approach

    Performance History (EUR)*

    YTD

    0.35%

    2022

    -11.74%

    2021

    4.06%

    2020

    -5.59%

    2019

    8.08%

    2018

    -12.57%

    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 77.2%
    USD 21.8%
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